How Alternative Lenders Unlock Homeownership

How Alternative Lenders Unlock Homeownership Opportunities

Once upon a time, those in Mississauga, Toronto, and the GTA dreamt of owning their own home. But increasingly, the path to homeownership became out of reach due to stringent lending criteria set by traditional banks. However, a new array of lenders emerged, offering alternative mortgage solutions that opened doors for aspiring homeowners. So, let’s get familiar with this very important lending niche!

What are Alternative Mortgage Lenders?

Unlike traditional banks, these lenders often operate with more flexibility, accommodating borrowers outside the conventional credit criteria. What sets alternative lenders apart? It’s the ability to pivot, adapt, and tailor financial solutions to meet the diverse needs of borrowers. These lenders, include credit unions, B lenders, Mortgage Investment Corps (MICs), and private lenders, Let’s take a closer look at each:

Credit Unions

Credit unions are member-owned and provide a wide array of financial services and products, including accepting deposits, making loans, and offering other banking services. Credit unions, often more lenient in their credit assessments, support borrowers with unique financial situations, offering an alternative path to mortgage approval.

B Lenders

B lenders, also known as non-conforming or alternative lenders, specialize in providing mortgage financing to borrowers who may not meet the stringent criteria set by banks. B lenders take a more flexible approach to underwriting, often assessing mortgage applications using a more holistic approach, considering factors beyond just credit scores. While interest rates may be higher compared to prime lenders and fees may be charged, their flexibility in underwriting allows borrowers with unique financial profiles to access mortgage opportunities that may be otherwise elusive.

Top B Lenders include –

  1. Home Trust: Home Trust is a leading alternative lender in Canada, specializing in providing mortgage solutions to self-employed individuals, newcomers to Canada, and individuals with credit challenges.
  2. Equitable Bank: Equitable Bank offers a range of alternative mortgage solutions, including home equity lines of credit (HELOCs) and reverse mortgages. They cater to borrowers who may not meet the strict traditional lending criteria and focus on finding tailored solutions to meet their clients’ needs.

Mortgage Investment Corps (MICs)

For a homebuyer who doesn’t qualify for a traditional mortgage, a Mortgage Investment Corporation (MIC) in Canada can be another solution. When traditional lenders have stringent criteria, MICs may offer more flexibility. These corporations pool funds from various investors and use them to provide mortgages. As a homebuyer, you might find an avenue through a MIC if your financial situation or credit history doesn’t meet the requirements of traditional lenders.

Private Lenders

Private lenders, as the name suggests, are individuals or organizations that lend their own money rather than funds deposited by customers. Operating outside the regulatory constraints of traditional banks, private lenders are often willing to take on higher levels of risk in exchange for potentially higher returns.

Private lenders focus less on credit scores and more on the value of the financed property. They often serve as a viable option for borrowers who may not meet the requirements of credit unions, B lenders, or MICs. Private lending comes with its own terms and conditions, including higher interest rates, fees, and shorter repayment periods.

Why do borrowers opt for the private mortgage route? For many, it’s the lifeline they need when traditional banks slam the door shut. Private lenders play a pivotal role in assisting borrowers with imperfect credit, non-traditional income sources, or those facing unique financial circumstances. Their focus on the property’s value rather than strict credit criteria positions them as a lifeline for individuals navigating challenging credit scenarios.

Private lenders are particularly valuable when it comes to second mortgages, which are used when homeowners don’t want to break their current mortgage or don’t qualify for a home equity line of credit to access their home’s value. There are many reasons for getting a second mortgage, including:

  • Debt consolidation – credit cards, tax arrears, unsecured loans – to reduce interest costs, boost cash flow, and improve your credit score.
  • Home renovations, including renewable energy retrofits
  • Large expenses – wedding, educational costs, medical bills, legal bills, divorce settlement, helping family, a big-ticket purchase, immigration costs
  • Investing in a rental or vacation property
  • Business needs

Expanding Housing Opportunities

The emergence of alternative mortgage lenders has expanded housing opportunities for Canadians. These lenders offer more flexible lending criteria, enabling borrowers with unique financial situations to access the funds needed to purchase their dream homes or access their equity for financial needs or opportunities. Whether it’s individuals with non-traditional income sources, self-employed individuals, or those with less-than-perfect credit scores, alternative lenders have become a lifeline for many prospective homeowners and existing homeowners.

Additionally, with higher rates, borrowers are finding it hard to qualify under the mortgage stress test where they must show they can afford their mortgage payments at a rate of two percentage points higher than the mortgage contract rate. With an alternative lender, you can have the option of getting a mortgage without the stress test requirement.

By offering options to individuals who may have previously been excluded from homeownership, these lenders contribute to increased housing affordability and accessibility. According to Stats Can, in the second quarter of 2023, outstanding loans from credit unions, private lenders, and mortgage investment corporations reached $388.6 billion.

Additionally, alternative lenders provide competition, which fosters innovation and drives the market to adapt to the changing needs of borrowers.

While alternative lenders provide access to financial opportunities, it’s important to keep in mind that rates are higher than with traditional mortgages and fees may apply. It’s essential to weigh the costs against the benefits while working with a trusted expert.

Joe Purewal, Mississauga Mortgage Broker – Alternative & Private Mortgage Specialist

Top-rated Mortgage Broker Joe Purewal is ready to review your situation to determine if an alternative lender is right for your situation. With a wealth of expertise, Joe can provide invaluable insights into credit unions, B lenders, MICs, and private lenders, helping individuals make informed decisions. If you are in Mississauga, Toronto, or the GTA and need to break free from traditional lending constraints, Joe Purewal is your trusted partner in exploring flexible and innovative financing solutions. Talk to Joe today!

Read More

What Lies Ahead After a Year of High Rates? How to Take Advantage?

It was a year marked by escalating interest rates, but now it’s time to turn the page on the challenging financial climate of 2023. From a Bank of Canada overnight rate of 4.25% at the close of 2022 to the current rate of 5%, coupled with a surge in bond yields influencing fixed rates, Canadians felt the impact. However, there’s optimism on the horizon as relief is anticipated.

Rate Cuts Are on The Way

In 2024, the anticipation of rate cuts has been generating considerable buzz and speculation. Economists aren’t wondering if the Bank of Canada will cut the overnight rate, but when they will. While nothing is set in stone, there are compelling reasons to believe that Canada could be the first country to cut rates as early as April. Here’s why:

  1. High Canadian Debt Levels: One of the primary drivers for rate drops is the alarming levels of Canadian debt. Canada has one of the highest household debt-to-income ratios in the world. According to a report by Equifax, total consumer debt came in at $2.4 trillion in Q3 2023, an increase of $80.9 billion from the same period last year. In terms of non-mortgage debt, total card balances reached $113.4 billion in the third quarter of 2023, an all-time high, representing a 16% increase from the same period last year.
  1. Mortgage Renewal Payment Shock: A looming $900 billion mortgage renewal payment shock is on the horizon for 2024 to 2026 according to RBC. This impending financial strain will be another crucial factor in the Bank of Canada’s decision to lower interest rates, providing relief to homeowners facing hefty mortgage payment increases and preventing an economic downturn. While rates won’t return to their pandemic lows, every rate cut will help homeowners with their renewals. 
  1. Mortgage Interest as a Significant Component of Current Inflation: Mortgage interest plays a pivotal role in current inflation rates. As mortgage rates rise, the higher interest paid increasingly contributes to the overall inflationary pressure. At the end of 2023, mortgage interest costs are one of the primary reasons we haven’t yet reached the 2% inflation target. This is why the Bank of Canada has said they would drop rates before inflation reaches the target. 
  1. Canada Heading into a Recession: With economic indicators like negative GDP and rising unemployment pointing towards a potential recession, the Bank of Canada will use rate cuts to cushion the impact of an economic downturn and help reignite the economy.

Strategies to Navigate Your Finances

Given anticipated rate cuts, now is the time to consider how you can effectively maneuver the expected environment in 2024. Here are some strategies for various scenarios.

  1. Focus on Your Mortgage Renewal Early: For individuals with upcoming mortgage renewals, early preparation is key. At renewal, you can shop the market to make sure you get the best deal possible, making this an important moment of opportunity!

    If your financial situation is becoming difficult, renewal is a fantastic time to discuss consolidating your debts to get one manageable payment. Debt consolidation can also boost your cash flow, save on interest costs, and potentially improve your credit score.

    Another option, if you are struggling with all your monthly obligations, is to consider extending your amortization for cash flow relief. Joe Purewal is a Mortgage Renewal Expert and will discuss all your options and guide you toward the perfect renewal plan that fits your needs and budget.

  1. Consolidate Debt Now: Consolidating debt before renewal through refinancing or a short-term second mortgage is another strategy that may be beneficial in our current economic environment. By consolidating debts into a single, lower-interest mortgage or line of credit, monthly payments can be reduced, making it easier to manage your overall debt load.

    Debt consolidation through refinancing involves breaking your current mortgage and replacing it with a bigger new mortgage to cover your mortgage and other debts. A second mortgage gives you the option of not breaking your mortgage and incurring fees,  and it lets you keep your low fixed-rate mortgage if you have one. 

  1. Consider a Variable or Adjustable-Rate Mortgage: Given the prospect of declining rates, it’s time once again to consider a variable or adjustable-rate mortgage. With an Adjustable Mortgage, when the Bank of Canada lowers rates, your monthly payment decreases, providing a cash flow boost—a good option for strained budgets. With a Variable Mortgage, your payments remain constant regardless of Bank of Canada rate changes. Lower rates mean you pay off more principal. Your choice depends on your cash flow needs and your financial goals.

Advice for Homebuyers: Seize Opportunities

We anticipate that lower rates will cause the housing market to head back toward its peak. Bidding wars, no-condition offers, sellers not willing to negotiate, and escalating prices could return, leading to stress and anxiety. The following factors have led us to this conclusion:

  1. Chronic Lack of Housing Supply: CMHC estimates that 3.5 million more homes are needed by the end of the decade to return to affordability, yet we are not on track to meet the current goal let alone an additional 3.5 million homes.
  1. Growing Population: Canada’s growing population continues to drive housing demand. Homes aren’t being built fast enough to accommodate this increase in housing needs. According to a study conducted by the Fraser Institute, from 2018 to 2022, Ontario added an average of 239,915 people per year, of which 153,065 were immigrants, or 64% of Ontario’s population growth. However, an average of 70,828 new homes were completed each year, resulting in a ratio of 3.4 new people to each new housing unit. That is quite the deficit! 
  1. Parental Support in Home Purchases: Parents assisting their children in buying homes is a prevailing trend. The intergenerational wealth transfer from the Baby Boomers to succeeding generations will continue to unfold and has become an important driver of the housing market. According to Sagen’s first-time buyer study, six in ten first-time buyers received financial support in some form from their families.

Don’t Wait – Seizing the Opportunity

Seizing the opportunity could mean buying your dream home at a reduced price and with the lowest possible downpayment. For example, if you’re eyeing a $950,000 home, you’ll need to put down 5% on the first $500,000 and 10% on the remaining amount, totaling $70,000 – a 7.4% downpayment. Once that $950,000 home crosses the $1 million mark, you must make a hefty 20% downpayment. Imagine the regret of missing out on locking in your dream home at a significantly lower price and downpayment!

Yes, interest rates are high right now, but remember your rate is only relevant during your mortgage term. The victory you achieve from purchasing a house at a great price lasts a lifetime!

For potential homebuyers, the advice is clear: don’t wait. Lower interest rates can act as a catalyst for the housing market, driving prices higher. Seizing the opportunity now can result in significant long-term financial benefits. Suppose you need help qualifying for a mortgage. In that case, we can discuss strategies like gifted downpayment, getting one or more cosigners, co-ownership with a family member or friend, letting renters help pay your mortgage, borrowing from your RRSP, and alternative lenders.

Get Expert Insights: Turn to Mississauga Mortgage Broker Joe Purewal

In navigating our complex mortgage and real estate markets, seeking professional guidance is paramount. Mississauga Mortgage Broker Joe Purewal provides insights and strategies tailored to individual financial goals. Joe’s perspective adds valuable context and will help ensure you make informed financial decisions. With a focus on personalized advice, Joe Purewal crafts tailored strategies for clients based on their unique financial circumstances and long-term goals.

As we anticipate the Bank of Canada’s move to lower the overnight rate, Canadians find themselves at a pivotal moment. By understanding the factors influencing this shift and employing strategic financial moves, you can navigate the challenges and seize opportunities in Mississauga, Toronto, and the GTA. Taking proactive steps, like getting expert advice from Mississauga Mortgage Broker Joe Purewal, can make a significant difference in weathering a financial storm and capitalizing on emerging trends. As the pages turn on the era of high rates, it’s time to prepare for the rates that we expect in 2024 and seize opportunities as they arise.

Read More

Great News: Bank of Canada Holds Key Rate Steady!

As anticipated, the Bank of Canada has decided to maintain the overnight rate at 5.0% for its final announcement of the year. The Bank noted that inflation is coming down in a “broadening range of goods and services” although rent and mortgage interest are keeping the shelter component of inflation very high and affecting our ability to approach the 2% inflation target. This is why the Bank of Canada will consider cutting rates before we officially reach that target.

In 2024, we expect the central bank to lower the overnight interest rate to stimulate the overall economy, assuming inflation remains under control. This news bodes well for over 50% of mortgages set for renewal in 2025 and 2026.

The major Banks predict that the overnight rate will drop 1 to 1.5% by the end of 2024. Many predict that the first rate cut could come as early as April 2024.

Source: Canadian Mortgage Trends

We also anticipate these rate cuts will have a positive impact on the Mississauga real estate markets and throughout Toronto and the GTA. With pent-up buyer demand, improved affordability thanks to lower rates and prices, robust immigration, and a chronic shortage of housing supply, we can expect increased activity in the housing market.

We continue to recommend to not wait for rates to drop to enter the housing market if possible. Paying a higher rate now at a lower home price is better than higher prices at lower rates.

It’s important to note that when home prices are below $1M, the minimum downpayment is 5% on the first $500,000 and 10% on the remainder.  When prices are over $1M, the minimum downpayment is 20%.  Don’t miss out on getting in on a low downpayment. You only need a small increase in price to offset the higher interest costs.

Purchasing when the market is down means less competition, no bidding wars, more time to decide, the ability to put conditions in offers, and sellers are more willing to negotiate. Remember that your rate only lasts for the term, while a great deal on a home lasts a lifetime!

If you need a mortgage or are planning to renew within the next six months, reach out to Joe Purewal, your trusted Mississauga Mortgage Broker, for a comprehensive review of your situation and expert advice. Given the complexity of the current market, it’s crucial to make the most informed decision possible.

If you aren’t financially ready but see a great opportunity to get into the Mississauga, Toronto, or GTA housing market at low prices, we can discuss these strategies:

  • Gifted downpayment
  • Co-signors
  • Co-ownership
  • Renting part of the home
  • Early inheritance
  • Borrowing from your RRSPs
  • Alternative lenders

The next Bank of Canada announcement is on January 24th, 2024. Stay tuned for more updates! Joe Purewal, the top-rated Mississauga Mortgage Broker, is committed to making sure you stay ahead of the game with timely insights on the mortgage and housing markets.

Read More

The Gift of Financial Well-Being

The holiday season is a time for celebration and joy. However, for many individuals in Mississauga and the Greater Toronto Area (GTA), it can also bring financial stress. With the additional expenses that come with December, feeling overwhelmed by financial worries is not uncommon. That’s why it’s important to prioritize your financial well-being and consider adding a comprehensive debt checkup to your holiday to-do list.

Conducting a debt checkup offers several advantages that can positively impact your financial stability. It allows you to regain control over your finances, alleviating stress, and anxiety. While it may seem counterintuitive to focus on debt during the holiday season, taking stock of your financial situation is essential, especially as the temptation to overspend looms. Many people find themselves burdened with debt overload when their credit card bills arrive in January. Proactively addressing your debt can help you start the new year with a clearer financial outlook.

So where do you start?

Assess Your Debts

Begin by creating a list of all the debts you are dealing with, including the amount you owe, the current interest rate, and the minimum payment. These debts may include credit card debt, personal loans, car loans, and mortgages, each with its terms, conditions, and implications for your overall financial situation.

Strategies for Paying Down Debts

A checkup gets you to identify high-interest debt and develop a strategy to pay it down effectively.

When it comes to prioritizing which debts to pay off first, there are two common strategies: the highest balance method and the highest interest rate method. The highest balance method involves targeting the debt with the largest outstanding balance and paying it off first while continuing to make minimum payments on other debts. This approach can provide a sense of accomplishment as you see a large debt eliminated.

On the other hand, the highest interest rate method involves focusing on the debt with the highest interest rate first. By tackling high-interest debt, you can save money on interest payments over time. This approach is often recommended for individuals who want to minimize the overall cost of their debt. The strategy you choose should align with your financial situation and goals. It’s important to evaluate your debts, their interest rates, and your available resources to determine which approach makes the most sense for you.

Managing Debt: Tips and Strategies

  1. Create a Budget: Developing a budget will help track your income and expenses, providing a holistic view of your financial situation. It enables you to identify areas where you can reduce spending and allocate funds toward debt repayment. Here is an online Budget Planner that allows you to create your budget and save it online. You’ll also get useful tips, and it will help you figure out your next steps with suggestions. You’ll get charts that show you where your money is going, and you have the option to compare your budget with those of other Canadians like you.
  2. Reduce Non-Essential Spending: Analyze your monthly expenses and identify areas where you can cut back on non-essential spending. This could include dining out less frequently, reducing entertainment expenses, stopping subscriptions you no longer use, or finding more affordable alternatives for certain products or services. Making small adjustments to your spending habits can free up extra money for debt repayment.
  3. Increase Your Income: In addition to cutting expenses, consider opportunities to increase your income, such as taking on a side job, asking for a raise at work, or exploring other ways to generate additional income. The extra money can be used to accelerate your debt repayment and achieve your financial goals faster.
  4. Avoid New Debt: One of the most important strategies for managing debt is to avoid taking on new debt whenever possible. While it can be tempting to use credit cards or take out loans to cover expenses, this only adds to your existing debt burden. Instead, focus on living within your means and finding creative solutions to meet your financial needs without relying on credit.
  5. Set Financial Goals: By establishing clear financial goals, you provide yourself with a roadmap for achieving long-term stability. Whether it’s paying off a specific debt or saving for a major purchase, having concrete objectives keeps you motivated and focused.
  6. Explore Debt Consolidation Options: Debt consolidation can be a viable option to streamline multiple debts into a single, more manageable payment. This approach simplifies your financial obligations, boosts your cash flow, reduces interest rates, and provides greater convenience.

    Consider the case of Joan and Yousef, who had a combined debt of $550,000 from their mortgage ($500,000), car loan ($25,000), and credit cards ($25,000). By leveraging their home equity, they rolled all their debts into a new $557,813 mortgage. Despite incurring a fee to break their existing mortgage, the payoff was worth it. They now enjoy an additional $980 in monthly cash flow. Joan and Yousef plan to use some of their improved cash flow along with tax returns and bonuses to accelerate their debt repayment, providing them with more optimism about their financial future.

    While breaking your current mortgage incurs penalties, you want to assess whether the potential savings outweigh these costs. By working with a professional like top-rated Mortgage Broker Joe Purewal, you can determine the feasibility of refinancing or explore other options like a second mortgage that also provides flexibility and financial breathing room. A second mortgage is a good option if you don’t want to break your mortgage and lose your current low rate. You consolidate your non-mortgage debts into the second mortgage and then pay down both first and second mortgages.
  7. Stay Committed to Your Plan: Once you’ve developed a strategy for managing your debt, it’s essential to stay committed to it. Consistency is key when it comes to debt repayment. Set up automatic payments, create reminders, and maintain your commitment to your plan, even when faced with unexpected challenges. Staying disciplined and focused will help you make steady progress toward becoming debt-free.

Joe Purewal, Mortgage Broker, and Cash Flow Specialist

Joe Purewal, a cash flow specialist, and top-rated Mortgage Broker can provide valuable assistance in achieving financial comfort and stability. Work with Joe when you have questions or need assistance with your credit score, to assess the feasibility of debt consolidation, and should you need to better understand alternative financing solutions that offer flexibility and breathing room. With Joe’s guidance, you can make informed decisions about your mortgage plan and overall financial strategy.

Remember, prioritizing a comprehensive debt checkup, implementing effective debt management strategies, and seeking professional advice can help you secure financial stability and start the new year on a strong footing. The gift of financial comfort is within reach for everyone in Mississauga, Toronto, and the GTA. Contact Joe today to embark on your journey toward a brighter financial future.

Read More

Mississauga Housing Stats and 2024 Projections

Data and analysis provided by ReMax.

The Mississauga housing market saw the average sale price decrease by 5.5% between 2022 and 2023, dropping from $1,130,192 to $1,068,367. Concurrently, sales decreased by 16.8%, falling from 6,176 to 5,137 units. The average sale price across all property types is expected to remain steady in 2024, while sales are anticipated to increase by 20%. Overall, the housing market is expected to shift from a buyer’s market to a balanced one in 2024.

City Centre, Hurontario, and Erin Mills are expected to be desirable neighborhoods in Mississauga in 2024. Condominiums are projected to experience the highest demand due to their affordability and an influx of buyers seeking affordable properties amidst rising living costs. There is also interest in duplexes and triplexes to offset monthly mortgage payments by renting out basements, entire floors, or specific units. Even though condominium prices have stabilized at a three-year low, first-time homebuyers are hesitant to enter the market due to the current high-interest rate environment, further delaying their plans. Consequently, increased demand is anticipated in the coming months.

“First-time buyers, move-up buyers, and newcomers are highly attracted to the Mississauga region with its affordable entry price and ample supply. Individuals have plenty of options, especially as the region welcomes several new developments in the years ahead,” says Charles Park, RE/MAX Realty Services Inc. Mississauga currently has 50 new development projects, with many facing delays due to supply chain and labor issues.

Access to public transportation, amenities, and public services is also a priority for buyers in the region, a crucial consideration for neighborhood selection and final purchase decisions.

As with other regions in Canada, higher interest rates are the dominant factor affecting the overall market in Mississauga and will be a key determining factor among buyers in 2024.

If you want to discuss your Mississauga purchase plans, get in touch with Mississauga Mortgage Broker Joe Purewal today!

Read More

Inflation drops to 3.1%!

Fantastic news! The annual inflation rate for October dropped to 3.1%, a significant decrease from September’s 3.8%. The Royal Bank’s projection hit the mark, while the Bank of Montreal had forecasted a slightly higher rate of 3.2%. This positive development is attributed to a decline in gas prices and a moderation in grocery prices.  

Excluding food and energy, inflation fell to 2.7%. Two other inflation measures, trim and median core rates, were also lower. These are closely tracked by the Bank of Canada so it was important they also headed down. 

Ultimately, the obstacle to reaching the 2% target lies in high shelter costs, encompassing rent and mortgage interest payments, which are a direct result of the Bank’s rate increases.

This is very favourable news for the Bank of Canada as it prepares for its next interest rate decision on December 6th, when we anticipate another rate hold. Some economists predict the first rate cut as early as April 2024, with additional cuts throughout the year due to slower economic growth and a softer labour market. While a return to the extremely low rates seen during the pandemic may not be likely, lower rates are certainly on the horizon.

Here in the GTA, we are in a buyer’s market. Now is a great time to look around for that perfect deal. If you aren’t yet financially ready but recognize the financial benefit of buying before prices rise, consider strategies like: 

  • a gifted downpayment
  • securing one or more co-signers to strengthen your mortgage application
  • co-ownership
  • renting out part of the home
  • selling assets
  • getting an early inheritance, or 
  • using an alternative lender with more flexible qualifying criteria. 

We’re here to assist, so let’s talk! 

Read More

Expert Tips to Boost Your Credit Score and Achieve Mortgage Success

Your credit score is more than just a number; it’s a key that unlocks the door to homeownership and it’s your passport to all financial opportunities. Understanding what a credit score is, why it’s so essential in the mortgage application process, and how you get and keep a strong credit profile can significantly impact your financial journey, now and in the future.

What Is a Credit Score?

Your credit score is a numerical representation of your creditworthiness. It’s a three-digit number that lenders use to assess how likely you are to repay your debts on time. Ranging from 300 to 900, a higher credit score indicates a lower credit risk, making you a more attractive candidate for mortgage lenders. But what makes this number so influential in your quest to own a home?

The Significance of Credit in the Mortgage Application Process

The mortgage application process is a rigorous evaluation of your financial stability, and your credit score plays a central role in this assessment. Lenders scrutinize your credit history to gauge your ability to manage debt responsibly.

When you apply for a mortgage, you’re essentially asking a lender to entrust you with a substantial sum of money. Lenders need reassurance that you’re a reliable borrower, and your credit score is one of the primary indicators they use to make this determination.

A strong credit score not only increases your chances of mortgage approval but can also affect the terms of your loan. A high credit score can lead to lower interest rates, which can save you a significant amount of money over the life of your mortgage. Conversely, a lower credit score might result in higher interest rates or even mortgage denial.

In essence, your credit score is your financial reputation, and it can significantly impact your ability to achieve homeownership. It is also within your control. Therefore, understanding how to boost and maintain a strong credit profile is an essential step in your journey toward securing a mortgage. By taking preventative measures and adopting responsible credit habits, you can improve your creditworthiness and open more financial opportunities.

Strategies for Building and Maintaining a Strong Credit Profile:

Ensure Timely Payments – Always: Late or missed payments on credit cards, loans, or bills have the biggest detrimental impact on credit scores. Payment history plays a substantial role in your overall credit score calculation. Consistently making on-time payments demonstrates your reliability and responsibility in meeting financial obligations. Employing reminders and automating payments can effectively mitigate the risk of payment issues.

Have Optimal Credit Utilization: Credit utilization refers to the percentage of your available credit that you currently use. Maintaining low credit utilization signals to lenders that you are not overly dependent on credit and possess prudent control over your expenditures. High credit utilization implies a greater risk of being unable to manage debt effectively. It is advisable to keep credit utilization below 30% for each credit account.

Maintaining low credit utilization yields several other advantages, including increased available credit, providing a safety net for unforeseen expenses, and preserving room for future borrowing if necessary.

To sustain low credit utilization, aim to pay off your credit card balances in full every month.  You should also refrain from maxing out your credit limits, which can happen if you are close to your limit. Interest charges and penalties could put you over.

If you do need to carry a balance, try to spread that debt amongst multiple cards so the utilization is low with each instead of having one card with high utilization. Additionally, consider accepting credit limit increases, but exercise caution to avoid unnecessary spending.

Establish a Credit History: Lacking a credit history leaves lenders with minimal information to assess your financial responsibility and credit management ability. Constructing a credit history involves responsible usage of credit cards and prompt payments. A demonstrated track record of responsible borrowing and repayment is invaluable. This is why it is very important not to cancel your oldest credit card, as it holds your lengthiest credit history. You may want to cancel a particular card to avoid paying the fee but first check to see if you can switch to a no-fee or lower-fee card and keep that valuable history. Seek guidance before deciding to cancel a credit card.

Diversify Your Credit Types: Having a diverse range of credit types, which may include one or more credit cards,  a line of credit, a loan, and a mortgage, tells lenders that you can manage various types of credit responsibly. We typically favour one credit card even if we have more than one available, and often we don’t use our line of credit. You may want to consider using your dormant credit accounts occasionally but then paying them off immediately.

Be Careful with Credit Applications: Submitting numerous credit applications in a short span can adversely affect your credit score, as each application generates a “hard inquiry” on your credit report. It is wise to be selective and only apply for credit when necessary to avert potential negative repercussions on your credit score.

Handle Negative Events: Bankruptcy and collections can inflict significant harm on your credit score. Avoiding these adverse marks is pivotal for maintaining a favorable credit score. Therefore, promptly addressing any outstanding debts or financial issues holds paramount importance.

Deal with Disputed Charges by Paying First, Then Get a Resolution

Discovering questionable charges on your credit card statement can be frustrating. However, refusing to pay and waiting for an investigation can be problematic. If you don’t clear the balance to zero, any credit card charges made after the next due date will accumulate interest charges from the date of purchase. Depending on your card usage, late payments might be reported to credit bureaus, impacting your credit history for up to six years.

In most cases, credit card issuers address fraud or errors effectively. Therefore, it’s advisable to pay the disputed charge(s) and await the credit to be returned to your account once the investigation concludes.

Monitor Your Score & Fix Errors: Regularly monitoring your credit reports empowers you to spot any inaccuracies, discrepancies, or signs of fraudulent activity. Reporting and rectifying these errors can uphold the accuracy of your credit information and preclude any negative impact on your credit score. You can obtain your credit score and report from Equifax and TransUnion.

Guidance and Support from Mississauga Mortgage Broker, Joe Purewal

Your journey to homeownership is linked to the strength of your credit score. However, the road to a strong credit profile can sometimes be challenging to navigate alone. That’s where trusted experts like Mississauga Mortgage Broker Joe Purewal come into play.

Joe Purewal can help craft a customized plan to improve your credit score so you can take deliberate steps to enhance your creditworthiness. Additionally, Joe can help you secure a mortgage while you focus on improving your credit. He has the expertise and available lenders that will look at difficult credit situations.

Your credit score is your passport to homeownership and a world of financial opportunities. By taking proactive measures, adopting responsible credit habits, and seeking guidance from Mississauga Mortgage Broker Joe Purewal, you can not only boost your credit score but also secure the mortgage you need to step closer to your dream of owning a home. With the right support, your financial journey becomes more manageable, and your homeownership goals become more attainable.

Don’t wait; start shaping your credit future today and unlock the doors to the world of homeownership.

Read More

Bank of Canada Announcement: A Rate Pause!

As widely expected, the Bank of Canada has decided to maintain its overnight interest rate at 5.0%. This decision aligns with the recent lower September inflation reading of 3.8% and a visibly weakening economy. Higher rates are effectively slowing down the economy.

The impact of higher interest rates is evident in the slowing housing market, which has struggled under the weight of our high-rate environment and stringent qualifying stress test. However, looking towards 2024, the Bank of Canada is expected to shift gears and implement rate cuts to stimulate economic growth if we are closing in on the 2% inflation target. This is promising for the over 50% of mortgages up for renewal in 2025 and 2026. Additionally, it is expected to have a significant impact on real estate market activity. We can expect a surge in buyer demand, given improved affordability, strong population growth due to substantial immigration, and a severe shortage of housing supply. These key factors will shape the future of the real estate market.

There’s one more Bank of Canada announcement this year, scheduled for December 6th.

If the tough stress test is making it impossible for you to get a mortgage but you can pull together a 20% downpayment, consider an alternative lender that qualifies at the lower contract rate. The rate will be higher but if you can afford the payments, you won’t need a very big increase in home value to offset the higher borrowing costs. And, when interest rates drop, you could refinance at a better rate.

Bottom line – if an alternative lender allows you to buy a house at a great price without straining your finances, paying a higher initial interest rate can really set you up for a secure financial future. Let’s talk! 

Read More

Great News – Lower Annual Inflation for September

September’s annual inflation came in at 3.8%, marking the end of a three-month upward trend. While it was great to see that headline number fall, so did the core measures of inflation, both on a year-over-year and three-month moving average basis.

This drop was primarily influenced by reduced costs in categories such as groceries, durable goods, and travel. Notably, gas prices surged, and as we all know, mortgage interest and rent remained significant contributors to keeping inflation above the 2% target.

We continue to believe that we have reached peak rates, and the next move will be a rate cut, but not until the end of the first or possibly the second quarter of 2024 as projected by the major Banks.

In light of the market slowdown, we recommend taking advantage of the current situation instead of waiting for rates to drop. This is particularly important considering the Fraser Institute’s recent study, which revealed that for every one unit of new housing built in the previous year, the country’s population grew by an average of 4.7 people. With such rapid population growth and limited housing supply, high housing costs are expected to persist or even worsen in the future.

Get in touch at any time, we have a range of advice and solutions to assist you in making your move into this market with confidence.

Read More

The Rising Trend of Co-Ownership in Canadian Real Estate

Co-ownership has emerged as a popular trend in the Canadian real estate market as Canadians explore innovative ways to enter the market and achieve their homeownership dreams. Co-ownership offers a unique solution, allowing individuals and entities to share the financial burden of purchasing a property while reaping the long-term appreciation of owning real estate.

Co-ownership not only provides a means to enter the housing market but also expands the possibilities for finding a more desirable location, achieving a larger home, or acquiring more property than one could afford individually.

According to a recent survey conducted by Royal LePage, approximately six percent of homeowners co-own their home with another party that does not include their spouse or significant other. Within this group, eighty-nine percent co-own with family members, primarily parents or in-laws, and seven percent with friends.

While multi-generational households have long been a part of Canadian living, this arrangement is gaining popularity for financial reasons, becoming the fastest-growing household type, according to Karen Yolevski, Chief Operating Officer of Royal LePage Real Estate Services Ltd.

While such households are traditionally formed to care for children and elderly parents, today, financial reasons drive many to opt for this arrangement. The Royal LePage poll revealed that seventy-six percent of co-owners pursued this arrangement due to their inability to afford a home on their own, with thirty-two percent attributing their decision to the Bank of Canada’s interest rate hikes that began in March 2022.

Types of Co-Ownership Arrangements:

To embark on co-ownership, your initial step should involve seeking advice from a reputable real estate lawyer and a mortgage broker. Gathering insights into structuring and financing your arrangement is essential.

There are two primary methods of co-owning property: joint tenancy and tenancy in common, although alternative options exist.

  1. Joint Tenancy: A joint tenancy setup involves all owners holding equal shares of the property. In the event of an owner’s passing, their share automatically transfers to the surviving co-owner(s). This arrangement is often used by spouses or partners, simplifying the inheritance process by bypassing probate.
  2. Tenancy in Common: Tenancy in common is the preferred option when co-owners want to hold unequal shares of the property, but all co-owners have an equal right to use the property. Ownership percentages can reflect everyone’s contribution. Often to sell a share of the property, the co-owner will need permission from the other owner. Typically, all co-owners must agree to sell the property. Proceeds from a sale are distributed based on ownership percentages. Should a co-owner pass away, their share is left to the beneficiary that they selected.

This arrangement is popular among friends, business partners, or individuals with different financial contributions. Clear communication and a well-drafted co-ownership agreement are crucial to avoid misunderstandings and conflicts. Again, legal and mortgage advice is essential to address potential scenarios like a co-owner wanting to bring in another occupant, and what happens should a co-owner lose their job or when one party wants to sell?

  1. Ownership through Corporations: Some individuals opt to co-own properties through corporations, where each shareholder owns a portion of the corporation, which in turn, owns the property. This approach can offer liability protection and tax benefits. It is commonly used in commercial real estate investments or when multiple investors collaborate to purchase a property. Ownership through corporations provides limited liability protection and flexibility in terms of adding or removing shareholders. However, it involves a complex setup, ongoing administrative requirements, and potential conflicts among shareholders.
  2. Condominium Corporations: While less common, co-owners can look at a condominium corporation where each person owns their unit and a share of common amenities. This ownership type can apply to smaller housing types such as units within a single house. Condominium owners must adhere to condominium by-laws and rules and can choose to participate in the board of directors. Each owner can sell or transfer their unit and secure their mortgage. Creating a condominium corporation entails multiple steps, including obtaining municipal planning approvals.

Important Considerations Associated with Co-Ownership:

When contemplating co-ownership, numerous factors must be carefully considered. Take your time to conduct thorough research and preparation:

  1. Selecting the Right Co-Ownership Partner: Choosing the right co-ownership partner is critical for a successful co-ownership arrangement, even when co-owning with family members. It’s important to consider factors such as shared goals, financial stability, and compatibility in terms of decision-making and property usage. Open and honest communication is essential, as is establishing clear rules and responsibilities.
  2. Financing Options: Co-ownership allows the pooling of financial resources, enabling better financing options. Joint mortgage applications enable co-owners to combine their incomes, increasing their borrowing capacity. Financial stability and reliability should be discussed among potential co-owners, as joint mortgages require all parties to individually cover the full monthly payment. The full payment needs to be made each time or everyone’s credit score could be impacted. A comprehensive understanding of each co-owner’s financial obligations and responsibilities is essential, as is considering creditor insurance for unforeseen events.
  1. Splitting Costs and Expenses: Co-owners must establish a fair and transparent system for splitting costs and expenses related to the property, including mortgage payments, property taxes, insurance, utilities, maintenance, and repairs. The co-ownership agreement should outline guidelines to prevent disputes or misunderstandings. Setting up a joint chequing account can facilitate cost management, with contributions used for bill payments and building a reserve for significant expenses like replacing windows, roofs, appliances, and furnaces.
  2. Separation or Sale of the Property: Planning for potential scenarios, such as disputes, one co-owner wanting to sell, or the sale of the property, is essential. Questions regarding property valuation, right of first refusal, and steps to dissolve the co-ownership partnership should be addressed in the co-ownership agreement. Exit strategies should also be included.

Formalizing the Partnership:

To safeguard the interests of all co-owners, formalize the co-ownership through legally binding agreements. A co-ownership agreement outlines each party’s rights and responsibilities, addresses potential disputes, and establishes a decision-making framework. Seeking legal advice during agreement drafting ensures that all legal and financial considerations are properly addressed.

Risks and Challenges of Co-Ownership:

While co-ownership offers many benefits, it also comes with its fair share of risks and challenges. Disagreements between co-owners, differing maintenance standards, and conflicting visions for the property can create tension within the partnership. Establishing open lines of communication, setting clear expectations, and having mechanisms in place to resolve conflicts can help mitigate these challenges.

Get Advice from Your Trusted Mississauga Mortgage Broker!

The increasing prevalence of co-ownership in real estate offers an opportunity to overcome homeownership barriers. With careful planning and effective communication, co-ownership can be a rewarding and cost-effective way to enter the real estate market in Mississauga, Toronto, and the Greater Toronto Area.

When engaging in a co-ownership arrangement, seeking guidance from professionals such as Joe Purewal, an experienced and top-rated Mississauga Mortgage Broker, is extremely important. Joe Purewal’s expertise can prove invaluable in navigating the complexities of obtaining a mortgage for a co-owned property. He can provide the necessary information, advice, and guidance to maximize the benefits of co-ownership while mitigating potential risks and challenges.

By combining careful planning, effective communication, and the best professional assistance, you can realize your real estate dreams through a successful and smooth co-ownership experience.

Title Tag: Co-Ownership Trends in Canadian Real Estate

Meta Description: Explore the rising trend of co-ownership in Canadian real estate. Learn how to achieve your homeownership dreams through shared ownership strategies.

Read More

Understanding Mortgage Rates: How to Get the Best Deal

Buying a home is a significant milestone in life, and finding the right mortgage is crucial to this journey. Many of us turn to online resources for information, including when it comes to mortgage shopping. Unfortunately, the lowest advertised rates are often used as a lure and are unattainable for most customers because they don’t qualify or it’s unsuitable for their needs. This can be very frustrating for prospective homebuyers and homeowners in Mississauga and the Greater Toronto Area.

To shed some light on why you may not qualify for that low advertised rate, and why rates can differ significantly, let’s explore the various factors that influence mortgage rates.

Does the Mortgage Require Default Mortgage Insurance? Whether your mortgage requires default mortgage insurance affects the rate you’ll be offered. There are three categories of mortgages related to this insurance:

Insured Mortgages: These mortgages benefit both borrowers and lenders. Borrowers with a down payment below 20% must obtain mortgage default insurance, which protects lenders in case of borrower default. The insurance cost is usually added to the mortgage, increasing the mortgage amount and payment. Insured mortgages provide access to lower down payment requirements and often the lowest rates, making homeownership more attainable.

Insured mortgages have a maximum property value of $1 million and require owner occupancy. They are only available for purchases and renewals, not refinances. The longest available amortization period is 25 years.

In Canada, mortgage default insurers include the Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth), and Canada Guaranty. To be eligible for mortgage default insurance, borrowers must meet specific criteria, including a solid credit score, adequate income, and property guidelines set by both the lender and insurer. Additionally, borrowers must pass the stress test, demonstrating their ability to manage higher interest rates or payments.

Insurable Mortgages: Insurable mortgages are eligible for mortgage default insurance, but it is not a government requirement. Lenders opt for insurance to reduce risk or securitize their mortgages. Since the lender pays the insurance premium, rates are slightly higher compared to insured mortgages.

Insurable mortgages are available only for owner-occupied home purchases (or renewals) with a down payment of 20% or more and for a property value of up to $1,000,000. The maximum amortization period is 25 years. The stress test is required, and insurable mortgages are not available for refinances.

Conventional/Uninsured Mortgages: Conventional mortgages are for borrowers with a down payment of 20% or more. These mortgages don’t require mortgage insurance, offering borrowers more flexibility. They can accommodate purchase prices exceeding $1 million, have extended amortization beyond 25 years, permit refinancing, and support single-unit rental properties. There is also more leniency towards credit scores and debt levels. Additionally, the mortgage stress test doesn’t apply when the financial institution is not federally regulated, such as credit unions. However, since lenders assume all the risk, rates are higher compared to insured and insurable mortgages.

Fixed vs. Variable Rate: The rate you’ll get depends on whether you choose a fixed or variable rate. Fixed rates remain constant throughout the mortgage term, providing predictability and consistent monthly payments. On the other hand, variable rates are tied to a benchmark rate and can fluctuate as market conditions change. While fixed rates offer stability, variable rates sometimes have lower interest rates but come with the risk of potential increases.

Is it a No-Frills Mortgage? No-frills mortgages are frequently advertised online with enticingly low rates. Usually, these are insured mortgages, but the low rate often comes with restrictions and fees that can be costly in the long run. It’s essential to do your online rate research but seek advice to understand any potential fees and limitations that may arise in the future.

Extended Amortization: Conventional mortgage holders have the option to extend their amortization period beyond 25 years, which offers cash flow flexibility through lower payments. However, this extension might come with a rate premium.

Investment Property Mortgages: Lenders often consider investment properties riskier, resulting in slightly higher interest rates compared to primary residences. Working with a Mortgage Broker can help navigate the complexities of investment property mortgages and find competitive rates.

B Mortgages: B mortgages, also known as alternative or non-prime mortgages, cater to borrowers who do not meet the strict criteria set by conventional lenders. These mortgages are tailored to individuals with lower credit scores or unique financial situations, resulting in higher interest rates compared to other mortgage types.

Private Mortgages: Private mortgages involve borrowing from private individuals or companies instead of traditional lenders. Borrowers often turn to these loans when they cannot secure financing through conventional means. While private mortgages may carry higher interest rates, they can provide a quick short-term alternative.

Leveraging a Mortgage Broker’s Expertise

Navigating the complex landscape of mortgage rates and options can be confusing and frustrating. This is where an experienced Mortgage Broker can make a world of difference. A skilled and trusted Mortgage Broker, such as Joe Purewal, not only connects you with lenders but also offers invaluable assistance in optimizing your financial situation for the best mortgage rates. Here’s how:

Enhancing Credit: To secure the best mortgage rate, it’s important to have a strong credit profile. A Mortgage Broker can assist you in repairing and enhancing your credit score before a mortgage application. Joe Purewal provides personalized strategies to help clients address any negative marks on their credit reports and establish a solid credit history. By enhancing your creditworthiness, you can gain access to more favorable mortgage rates.

Debt Restructuring: Managing debt effectively is crucial for obtaining the best mortgage rates. A Mortgage Broker can advise you on reorganizing your debt to improve your overall debt-to-income ratio. Through optimal debt management, you can position yourself favorably for more competitive mortgage rates.

Options to Improve Qualifying: There are options available to help you improve your ability to qualify for a mortgage and get the best rates. For example, a gifted downpayment involves having a family member provide some or all the down payment as a gift. You could also access funds from your RRSP through the Federal Home Buyer’s Plan. These options can increase your downpayment, which can make a real difference in your ability to purchase your desired home and access the best rates.

If you still need help qualifying, getting a cosigner on your mortgage can boost the strength of your application because your cosigner’s financial profile is added to your application to strengthen it. A Mortgage Broker can provide invaluable advice on down-payment and qualifying strategies.

 Market Analysis and Rate Comparisons: Mortgage Brokers conduct thorough market analysis and rate comparisons on behalf of clients, identifying optimal mortgage rates and terms. Joe Purewal’s extensive network of lenders enables him to pinpoint the most competitive rates available. Even then Joe will negotiate on your behalf to help you access the lowest rates possible.

Ongoing Rate Monitoring: Even after securing a mortgage, Joe Purewal continues to monitor the market for any changes in interest rates that could prove advantageous for you. For instance, you’ll be advised when the time might be right to refinance your mortgage to achieve a lower rate or for debt consolidation, potentially leading to substantial long-term savings.

Positioning for the Best Rate

Now that we have reviewed the intricate landscape of mortgage rates, one thing remains abundantly clear: securing the optimal mortgage deal demands more than a cursory glance at online rates.

That’s why you need the unparalleled expertise of Mortgage Broker, Joe Purewal. His role extends beyond connecting you with lenders and rates, he’s a strategist who will tailor a strategy that can enhance your credit, help you manage your debt, and ensure you can navigate the intricate qualification landscape. Having Joe Purewal by your side isn’t just an asset—it’s the assurance of accessing the best mortgage and best mortgage rates for your situation.

If you are looking to buy a home in Mississauga, Toronto, or the Greater Toronto Area, work with Mortgage Broker, Joe Purewal, and allow him to guide you seamlessly through the process, and help you achieve your dream of homeownership.

Read More

Fall Homebuying: Is Now the Right Time? Uncover the Advantages and Steps to Qualify

Are you considering buying a home in Mississauga, Toronto, or the Greater Toronto Area (GTA)? As the fall season approaches, you may be wondering if it’s the right time to make such a significant investment. Purchasing a home is a big decision, and timing can play a crucial role in ensuring you get the best deal. Let’s explore whether this fall is the right time to buy a home, discuss the steps to take to improve your chances of mortgage qualifying, and the options we have that can help.

This Fall – A Favorable Time for Homebuyers

In the Spring, when the Bank of Canada paused its interest rate hikes, the housing market accelerated and recovered a good portion of the losses sustained in 2022. Now with two subsequent rate hikes in June and July and increased fixed rates, some homebuyers have become nervous, not to mention priced out of the market with an increasingly tougher qualifying stress test. There will be fewer buyers actively searching for properties, which means less competition, giving you improved negotiating power and potentially better prices.

Additionally, sellers who have listed their homes during the summer months and have not yet sold could be more motivated to close the deal before the end of the year. This increased motivation can work in your favour, as sellers may be more willing to negotiate on price or other terms.

Surging Immigration and Lack of Housing Starts

If you needed any further motivation to buy a home this fall, consider the current state of housing in Canada. There is a persistent shortage of housing due to the failure of new home development to keep up with demand. In 2022, the Canada Mortgage and Housing Corporation (CMHC) noted that Canada needed to construct 3.5 million more homes by 2030 to achieve home affordability for Canadians. This is in addition to the nineteen million housing units that were already expected to be completed by 2030. However, according to CMHC data, housing starts are on a noticeable decline, and we may not even reach the original nineteen million new housing units by 2030.

Adding to the housing shortage, Canada’s immigration targets have increased, further straining the market. In 2023, Canada is targeting 465,000 new permanent residents, followed by 485,000 in 2024, and eventually aiming for 500,000 new arrivals each year starting in 2025. This influx of new residents adds to the already high demand for housing.
Statistics Canada reported that the Canadian population reached more than forty million as of June 16, 2023. This milestone came faster than expected, with 1.050 million people arriving in 2022, the first time our population grew by over one million people in a single year, with most being permanent and temporary immigrants.

While our population is now growing at a record-setting pace, our housing infrastructure is struggling to keep up. The resulting scarcity from our chronic lack of supply leads to a very competitive real estate market and sometimes bidding wars, creating frustration, and making it exceedingly difficult for first-time buyers to find affordable options.

Inflation is Tumbling

On July 18, annual inflation tumbled to 2.8%! We are finally getting closer to the Bank of Canada’s target of 2%. When the Bank feels it has achieved success in achieving this goal, rates will start to come down.

But don’t wait for rates to start falling. Once rates do start to come down, this could fuel the market, given pent-up demand, improved affordability, surging immigration, and a severe undersupply of housing supply.

Buyers are already aware of the market dynamics and are out house shopping. Phil Soper, CEO of Royal LePage, in this recent Financial Post article, noted that there are buyers who have accepted the reality of higher initial mortgage payments, believing that rates are either at or close to their peak and that carrying a mortgage will become more affordable before long.

Qualifying for a Mortgage: Key Steps to Take

Now that we’ve discussed the potential benefits of buying a home in the fall, let’s dive into how you can qualify for a mortgage and make the process smoother.

1. Check your credit score and polish your credit: Lenders use your credit score to determine your creditworthiness. Your score can affect your ability to get approved for a mortgage and the interest rate you receive. A higher credit score generally translates to lower interest rates and better terms, which can save you thousands of dollars over the life of your mortgage. You can ensure your credit score is in good shape by paying your bills on time, keeping your credit card balances low (below 35% of your limit), and correcting any errors that you may find on your credit report.

2. Pay off debt. Paying off debt before getting a mortgage is recommended because it can improve your debt-to-income ratio, free up cash flow, lower monthly payments, reduce financial stress, and improve your credit score. This can make it easier to qualify for a mortgage with favorable terms and put you in a stronger financial position overall.

3. Get pre-approved: A preapproval is important because it helps you determine your home much house you can afford, shows sellers that you are a serious buyer, gives you a rate hold for up to 120 days, and streamlines the mortgage application process. A pre-approval can save you time, prevent you from overreaching, and increase your chances of having your offer accepted.

4. Increase your downpayment: A larger down payment can lower your monthly mortgage payments, improve your ability to qualify with your lender, reduce the amount of interest you pay over the life of your mortgage, and potentially eliminate the need for mortgage default insurance if you have a 20% or larger downpayment. A common strategy for many new homebuyers is to get a gifted downpayment from parents or grandparents. You can also withdraw up to $35,000 from your RRSP under the first-time buyers’ plan.

5. Get a co-signor. A cosigner for your mortgage application can be beneficial if you have a low credit score, little credit history, or a high debt-to-income ratio. A cosigner with good credit and income can help strengthen your application by adding their financial resources to yours, which can increase the likelihood of approval and improve the terms of your mortgage.

6. Get advice early from Joe Purewal, Mississauga Mortgage Broker! It’s a good idea to have Joe help you understand your options and identify potential roadblocks before you start the application process. He can review your financial situation, credit history, and other factors that could impact your ability to get approved for a mortgage. By seeking advice early, you can avoid surprises and make informed decisions that can save you time, money, and stress in the long run.

Our Mortgage Solutions to Help with Qualifying

We have mortgage options that are specifically designed to help you qualify at today’s rates and help you manage your monthly budget.

Extend Your Amortization
The benefit of extending your amortization is lower monthly payments, which can make a dramatic difference if your budget is tight. You can always shorten your amortization once rates begin to drop, and you have more breathing room.

To get a 30-year amortization mortgage, you need a 20% downpayment, which is another reason to try and achieve a larger amount down. Some non-prime lenders offer 40-year amortizations, but they do come with a rate premium.

6-Month Mortgage
This mortgage may sound odd; why take a new mortgage for only 6 months? The benefit of this product is that the rate is significantly lower and is essentially a promotional rate to help you qualify and pass the stress test. Then at 6 months, you renew into the product that looks to be the best at that time.

Non-Stress Tested Mortgages
Most non-prime lenders and credit unions are not required to use the stress test for mortgage qualifying because they aren’t federally regulated. These lenders will qualify you at your contract rate, and not your contract rate plus 2%. This can help you qualify for the amount you want or allow you to purchase more house.

Final Thoughts
While this fall looks to be an opportune time to buy a home in Mississauga, Toronto, and the GTA, it’s essential to consider whether you are financially ready or not. Remember that the right time to buy a home is determined by your financial readiness, market conditions, and personal goals.

If you’re well-prepared and have done your due diligence, this Fall can offer unique advantages for homebuyers like reduced competition and motivated sellers.

If you’re considering buying a home this fall, start by assessing your financial situation, getting pre-approved, and contacting Joe Purewal, Mississauga Mortgage Broker as soon as possible. With the right preparation and expert assistance, you can make the most of this time and find your dream home in Mississauga, Toronto, or the GTA. And you’ll get the best mortgage rates and service!

Read More
Call Now ButtonCall Now