Getting a Mortgage in Canada
The Canadian mortgage and housing market has evolved over the years with respect to the demand and supply of real property in the country. The Canadian mortgage trends have indicated a high level of dependency on mortgage loans to finance the purchase of houses. Buying a house in Canada is not a difficult task but obtaining a mortgage loan is pain staking.
The Canadian mortgage news suggests that the major banks and lending institutions are offering extremely low mortgage rates. One would think that this would make the task of obtaining mortgage loans much easier. This is not the case however. Although, the Canadian mortgage and housing markets functions the same way as any other market, there are a few distinct differences.
The Canadian mortgage rules are quite strict when it comes to applying for mortgages. This is one factor which makes the task more difficult despite the low mortgage rates. The new mortgage rules in Canada have come up with even stricter policies than before.
The level of government intervention in the Canadian mortgage and housing market is much higher than that seen anywhere else in the world. The constant regulation and monitoring by the government and the Canada Mortgage and Housing Corporation (CMHC) has kept the market stable. Where most of the real estate markets all over the world were seen to face instability and financial crisis, the Canadian mortgage and housing market was able to recover itself with minimal damage.
Many people tend to criticize the government for intervening constantly but the fact is that if this was not the case, the Canadian mortgage and housing market would have collapsed. The Canadian mortgage trends have shown exponential growth in the sector. However, this is not always a positive sign. In many cases such levels of growth create a bubble which can burst at any time. This bubble effect can shatter the whole economy.
But the government and the Canada mortgage and housing Corporation (CMHC) alone cannot ensure the efficiency and effectiveness of the Canadian mortgage and housing market. Even the borrowers of mortgage loans need to pay special attention to some key factors before they apply for a mortgage.
The first thing that the borrowers need to do is look for a suitable mortgage broker or brokerage house. This is because these are trained professionals who sell mortgages on behalf of the lenders. They have a good insight into the Canadian mortgage and housing market and therefore, are able to advise the customer on the options which suit their needs.
These brokers will not charge application fees from the customers but will be paid by the mortgage lenders only. The only point that the customers need to consider is that these brokers should have the license issued by the provincial regulatory authorities which authorize them to sell these mortgages. This will also reduce the risk for the customers as they can be sure of their eligibility.
The Mortgage Rules
The Canadian mortgage rules are quite well-defined and easy to understand. It is advisable that the borrowers should have some knowledge of these rules and regulations as they will help them make a well-informed decision. This also helps in ensuring that the brokers will not be able to misguide them in any way.
An understanding of the Canadian mortgage rules will also help the borrowers in analyzing their own affordability. They can calculate the payments and interest charges along with the amortization periods according to their own income and affordability criteria. They can compare the results of their own calculations with the Canadian mortgage rues and identify whether or not they are eligible for a certain mortgage loan.
There is a lot of paperwork that needs to get done before the actual application for the mortgage loan can be submitted. After studying the Canadian mortgage rules and identifying the Canadian mortgage trends it becomes relatively easy for the borrowers to make calculations of their own.
These calculations are not at all difficult. Although, there may be some technicalities that may be difficult to comprehend but the calculations will help in providing a clearer picture of what the loan will actually require.
A mortgage calculator is the basic tool that helps in making relevant calculations. Many banks and lending institutions have provided these calculators that perform the necessary calculations automatically and all that has to be done by the borrower is to interpret the results.
After identifying the suitable bank, lender or broker, the borrowers need to calculate their current debt amounts. These will provide them with an assessment of their monthly debt expenditure and also if they can actually afford the mortgage they are willing to take. A credit report mad s ore is also required for submitting the application. Proof of identity, tax paperwork and the poof of income will have to be submitted to the lender as well.
How This Helps?
The insights that a borrower gains by analyzing the Canadian mortgage and housing market helps them in the decision making process. It helps save a lot of time and effort which could get wasted if they do not have sufficient knowledge of the market.
An understanding of the Canadian mortgage rules helps them analyze and identify the options that suit them best. They will be able to bargain with the brokers and lender through their information too. Because this is a highly competitive market, the need to gain as much knowledge as possible does exist. Making decisions without relevant information may even end up costing more.
It is not just the responsibility of the government and the lenders and brokers to abide by the Canadian mortgage rules. They need to be understood and complied by the borrowers too in order to ensure that the risk is minimized and the Canadian mortgage and housing market functions more effectively. The risk is not just for the government but also for the people who are investing their money into the market.