As home prices continue to soar, home sellers seem to be dominating the Canadian housing market. The market set record highs due to a boost in demand over the past two years. If you’re on the hunt for a new home, you might be wondering, will the red-hot housing market slow down this year?
Although the Canadian Real Estate Association (CREA) projects a 12.1 percent decline in sales in 2022, the imbalance between demand and supply may continue due to the limited supply in housing.
If you’re on the market to find yourself a new home, shopping for a mortgage can be challenging under the current housing climate. Here are some tips for a seamless mortgage shopping experience.
Use a Mortgage Payment Calculator
A mortgage payment calculator determines your scheduled payments by factoring in several elements of a mortgage, such as the home price, interest rate, down payment, and amortization period. The calculator can help you determine your next steps as a homeowner by making it easier to budget and prepare your finances.
Due to the range of mortgage calculators available today, it is essential to find one that can provide a one-stop solution for all your mortgage calculation needs. Look for a dependable mortgage payment calculator Canada residents have access to and leverage that tool to determine your financial standpoint.
Determine the Type of Mortgage You Want
Lenders offer a range of mortgages that provide homebuyers flexibility. It’s essential to consider different mortgages before deciding which one best suits your needs. Here are some common mortgages in Canada.
- Open/Closed: An open mortgage allows you to pay off the mortgage at any given time within your agreement period without facing a penalty. On the other hand, a closed mortgage is restrictive, and you cannot pay off the loan anytime without penalty.
- Fixed/Variable Rate: With a fixed-rate mortgage, your payment remains the same throughout the term. However, with a variable rate, your payment during the mortgage term can fluctuate when your lender changes its prime rate, which can occur overnight.
- Conventional: This type of homebuyer’s loan requires you to make a minimum down payment of 20 percent. It is offered by a private lender and not a government entity.
- High Ratio: A high ratio mortgage is a loan higher than 80 percent of the property’s lending value.
Contact Multiple Lenders
Applying to multiple lenders can help you get a better rate by comparing what every lender is offering and result in savings. You should start contacting two to three lenders after selecting the type of mortgage you prefer. Not all lenders offer all types of loans, so you can narrow down your lender options after choosing the mortgage type.
Aim to Get Pre-Approved
A pre-approval letter assures sellers that you’re financially capable of purchasing the home you’re interested in. It also shows real estate agents that you’re a serious buyer, and it opens up more windows of opportunities as they will put in more effort into searching for the perfect home for you. In addition to taking an enormous burden off your shoulders, pre-approval can reduce timelines and help you close your loan swiftly.
Set Realistic Expectations
Lastly, it is necessary to set realistic expectations about your mortgage. You may not always get the rate you prefer, as mortgage rates fluctuate overnight. Being realistic about your affordability and flexible with potential rises in home prices or mortgage costs can make the process a lot simpler.
