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Despite the myriad of fear-instilling headlines in all the major papers, the Ontario real estate market is NOT on the verge of collapse, or disarray, or whatever the latest misleading headline is touting; the troubles within the industry are actually only applicable to those who sell real estate products and whether they’re making as much money as they were a few years ago. The reality is, they’re not; the slowing world economy and Canada’s weather have taken a toll on sellers in Ontario and parts of the nation. But here’s another reality: the Ontario sellers’ hardship is the would-be Ontario buyers’ golden opportunity, and that’s the story that isn’t making headlines in the papers so here is the inside scoop…
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The fact that Ontario sellers are struggling is actually good for buyers, thanks to the natural ebb and flow of supply and demand. With contractors and sellers in Ontario not being able to move homes / condos as fast and existing home sellers struggling to unload properties too, there’s a major real estate surplus in the region. That means that would-be homebuyers can negotiate uncanny steals on real estate! The one catch to this great buying opportunity for homebuyers: Qualifying for a mortgage with a Canada mortgage company or bank is still a must! So, if the newsflash above has got you thinking about buying, keep the following in mind as you seek financing for your house:
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Do your homework. Not every type of mortgage is best for you. Though an Ontario mortgage consultant will explain why a particular type of mortgage loan is best for you / your situation, you should begin your mortgage loan search with a basic understanding of the various types of Canada mortgage loans that are available.
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Remember: Credit is still king. Whether you’re applying for an Ontario mortgage or a mortgage loan anywhere else in Canada, having a good credit history will work in your favor. It will make you eligible for a wider variety of Ontario mortgage loans and it will help you to negotiate for lesser interest rates on your mortgage loan.
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Shop around. Despite the variety of Canada mortgage options available, many people still think that the bank is the best financier to contact for a mortgage! Now, it’s not that a national bank isn’t a good place to go for a mortgage; it’s just that a local, Ontario mortgage company may be a better option. The reason is simple: Banks have a small collection of mortgage loans they can offer, many with very rigid interest rates and stipulations. Plus, with the economies of many major world markets being so unsteady, many banks are being exceptionally choosey about those to whom it will provide a mortgage loan. Meanwhile, Ontario mortgage brokers have access to dozens of lenders, which often gives them more loan options and flexibility in offering interest rates. As an added bonus, excellent credit standing is still great to have but imperfect credit isn’t a "deal breaker" with Ontario mortgage companies as it often is with the local banks. Don’t misunderstand. Ontario mortgage companies have also raised the bar on mortgage loan requirements, but they don’t scrutinize nearly as much.
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Pre-approval is power. By being pre-approved for a mortgage loan, you’ll certainly wet any hungry seller’s appetite. Why? Well, that pre-approval mortgage letter lets sellers know that if they want to close the deal sooner rather than later, they can do it without having to worry about whether financing will come through. That’s a huge benefit for you as a buyer throughout Ontario, and anywhere in Canada really, because it gives you the upper hand when negotiating. Imagine how it would feel to walk up to the seller of your dream home and say, "I want this property for X thousands of dollars below your asking price and I’ve got the papers to prove I can afford to take it or leave it! " That would be empowering!
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No knee-jerk reactions! It may be tempting to jump into an Ontario mortgage and take advantage of the current Canada real estate market but be advised: Only do so if you’re ready. That means having a minimum of 5% of the home price you think you can afford saved for the down payment as well as monies for any fees related to closing on the home. Plus, you’ll need to have money budgeted for home maintenance, mortgage insurance, and all of the other expenses that come with being a homeowner.
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It may be tempting to jump into an Ontario mortgage and take advantage of the current Canada real estate market but be advised: Only do so if you’re ready. That means having a minimum of 5% of the home price you think you can afford saved for the down payment as well as monies for any fees related to closing on the home. Plus, you’ll need to have money budgeted for home maintenance, mortgage insurance, and all of the other expenses that come with being a homeowner.
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© Copyright 2008 CompareMortgageQuotes.ca |
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It’s a buyer’s real estate market in Ontario right now, especially in Toronto! So, if you’ve been planning to buy a home, put your plan into action. To do that, all you’ll really need to do is to make an appointment with a Toronto mortgage consultant. However, it’s a good idea to have a basic understanding of how Toronto mortgages work first. So, here’s a quick overview of what you should know before setting up a meeting…
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Types of Residential Toronto Mortgages
Fixed Rate Mortgage v.s. Variable Rate Mortgage
Just like the name suggests, fixed rate loans provide a set interest rate for the life of the mortgage loan. Therefore, you’ll always know how much your mortgage payment will be. Meanwhile variable interest rate loans often have enticing low initial interest rates that will adjust (higher or lower) every few months based on your Toronto mortgage loan lender’s rates or Canada’s prime bank rate. Both types of loans are typically available through most, if not all, Toronto mortgage firms; some companies may also provide loan options that are a combination of the two.
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Open Mortgage vs. Closed Mortgage
The primary difference between a closed mortgage and an open mortgage loan is whether the loan can be paid off in advance of the original loan term without penalty. Open mortgage loans can be paid off at anytime within the loan period; closed mortgages cannot. Additionally, open mortgages can be renewed or refinanced at any time. However, that option is not available on closed mortgages either. As a result, open mortgages provide more freedom. Therefore, most Toronto mortgage companies focus on providing open mortgage loan options.
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Conventional Mortgage v.s. High-Ratio Mortgage
A conventional mortgage is the Toronto mortgage industry term used to describe a mortgage loan that’s provided when a homebuyer invests a minimum of 25% of the purchase price as a down payment. Anytime less than 25% is contributed towards the purchase of the home, it’s called a high-ratio mortgage. Considering that the average Toronto homes costs approximately $375,000, most Toronto mortgage companies offer multiple high-ratio mortgages to buyers.
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Toronto Mortgage Down Payments
In general, most Toronto mortgage down payments can be categorized into one of three tiers. They are as follows:
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Tier 1 - Zero percent down
This type of Toronto mortgage down payment is sometimes referred to as a zero percent down payment mortgage or 100% financing. The upside, of course, is that you can move into a new home without having to wait to accrue enough money for a down payment. The downside can be steep though. Most 100% financing Toronto mortgages are provided at a significantly higher interest rate than mortgages that are lent with a down payment.
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Tier 2 - Five to fifteen percent down
This is the most common type of down payment required at most Toronto mortgage companies over the past few years. Having 5% to 15% of a home’s purchase price shows lenders that you’re willing to make an investment, which often results in Toronto mortgage brokers being able to provide buyers with more mortgage loan type, lender and interest rates options.
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Tier 3 - Twenty-five percent down
As stated in the previous section, the 25% down payment is only required for those who opt for a conventional loan. Those who are able to afford the 25% down payment often receive the lowest interest rates available for their credit standing.
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Credit Requirements For Toronto Mortgages
A loan is a loan is a loan. So, the way Toronto mortgage brokers and lenders throughout Canada decide what kind of mortgage loan you’re eligible for is based primarily on the person’s credit history. Therefore, it’s imperative that you focus on making on-time payments to all creditors for at least nine months prior to applying for a mortgage. If you don’t have a credit history at all or if you don’t have a credit history specifically within Canada, you’ll need plan ahead for buying a home even further; they’ll need to establish credit in Canada at least two years prior to applying for a mortgage in order to build a credit history.
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One final note: Keep in mind that Toronto mortgages are always dependent upon a your credit standing and are often offered in an array of combinations of the loan and down payment types listed above. Therefore, you should go into your meeting with a Toronto mortgage consultant with an idea of the type of Toronto mortgage you prefer but at the same time, be open to the advice that the mortgage professional provides. After all, they’re experts in Toronto mortgages for a reason!
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© Copyright 2008 CompareMortgageQuotes.ca |
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