Canada is such a beautiful place to live but the Canadian housing market is always increasing prices. With the continuous hike in the housing market, it has become really difficult for self-employed people to buy a home. The Canadian government always intervenes in real estate to prevent a crash in the housing market but lately, too many changes are happening, and it is hard to keep up. Buying property or a house in Toronto has become even more difficult because it is the capital of the country.
But it is just the tip of the iceberg, here is a brief overview of the nuances of getting a mortgage in Canada.
Table of Contents
1. The higher ratio of down payment
The Toronto residential mortgage is really getting out of range as the government is looking for a 35% down payment. Basically, it is due to the change in real estate regulations B-20. But it is too much. No one has expected it to be that high given the regular job situation in Canada. However, people may be able to get in touch with other lenders such as credit unions to ease down the rule of 35% but it would lead to high interest eventually.
Also, buying through credit unions comes with terms and conditions of their own which are harder for self-employed personnel.
2. The nuance of qualifying for a lower mortgage amount
In Canada, one can look up the variable rate mortgage but within the time span of less than 5 years. But for that, you are required to have a higher qualifying rate. Currently, the Bank of Canada has a 5.24% qualifying rate, and they can offer a 20% down payment or somewhere around it. Sometimes, they offer an insured mortgage that is less than 20% down.
Given this situation, I guess most people will qualify for less because their price rate has dropped significantly while buying a house.
3. The criteria of qualifying for a mortgage is also a nuance
When banks have to qualify the people for the mortgage, the banks have to look through the details of recurring expenses of that particular home ownership. Things like heating expenses, condo fees, and other miscellaneous expenses can be checked. Based on these expenses, banks tend to do their own math to see if the applicant is able to afford the mortgage or not.
Sadly, this could even lower the chances of securing a big mortgage amount.
4. Cash-back incentives
The lenders are offering cash-back incentives to some people but in reality, this offer is only for first-time buyers who meet the down payment requirement. But if you meet the requirements, you should definitely buy through the bank and shouldn’t go to lenders. Involving credit unions is going to charge you some extra bucks and in the long run, it is not worth it.
Sooner or later, you might have to pay more in the end. So, if you can save even some of the money, maybe delay the decision of buying a house or condo and wait till you have more.