Buying a home is often a great experience, and very exciting, but to many Canadians, it might not be something they are all familiar with. It’s no wonder our clients have so many great questions about mortgages, but there are a few that come up a little more often. Here are the top 5 questions we get asked when people inquire about the mortgage process.
1. Which lender is best for me?
There’s no way of knowing which lender is best for you until your mortgage broker has had a chance to examine your financial situation. However, once your mortgage broker has done that, they will be able to advise you where you can get the best mortgage.
2. Why should I get a mortgage pre-approval?
A mortgage pre-approval gives you something concrete to start searching for a home. You will know what you qualify for, and much of the paperwork will already be in place, so when you find the home of your dreams, you can move more quicker.
3. Should I opt for a fixed or variable mortgage?
There are pros and cons to both fixed and variable mortgages. Right now, with rising interest rates, many people are opting to pay the higher rate associated with fixed-rate mortgages. This is a great way to keep payments consistent so you can budget your expenses better. However, while we know there will be some more volatility before things normalize again, no one knows for sure for how long.
A variable mortgage gives you a lower rate right now, but if rates climb again, you could spend more than you planned. A mortgage broker will be able to tell you whether a fixed or variable mortgage is the right choice for you right now.
4. How much should I put down as a deposit for a home?
In addition to stress tests, Canadian home buyers also must show that they can handle payments without defaulting on their mortgages.
When putting down less than 20%, you do have additional default mortgage insurance that you will need to pay on top of your principal and interest. Default mortgage insurance protects lenders in case of homeowners default on their mortgages. Different rates will apply depending on how much you put down. If you want to know more about the cost of default insurance, our mortgage calculator can show you the % and dollar figures of the insurance. Click here to use our mortgage calculator.
5. What are the hidden costs when buying a home?
Unfortunately, the price you see on the for sale ad isn’t the total amount you will pay for your home. Our mortgage brokers from Lethbridge, Calgary, and Edmonton can help you to estimate these costs before you start shopping for a home so you know what to expect.
Some of the costs you might have to cover include home inspection costs, appraisal fees, land transfer costs (Not in Alberta), title registration fees, legal fees, taxes, and more. The costs that apply to your specific situation depend on what kind of home you are buying, whether it’s a new build or not, the value of the property, and more.
Speak with a Mortgage Broker
If any of these 5 questions still create uncertainty for you, the best thing you can do right now is speak with a mortgage broker. Our team has years of experience helping people through the mortgage pre-approval process and into a new home. Whether you’re in Lethbridge, Edmonton, Calgary, or a rural area, reach out to us today and start asking questions!