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When you are in the market for a new home, you should always start by working with a bank to receive pre-approval for a home loan. Mortgage pre-approval tells you how much you can borrow for a property and your expected interest rate. It will also provide an estimated monthly mortgage payment that you can expect to pay.
When you receive pre-approval, a bank will look at your current financial situation as well as your credit score. Your credit rating gives the bank a glimpse into your financial habits. This tells them whether or not they can confidently lend you a large sum of money. If you are high risk, it will increase your monthly costs.
The Rates in Canada
Many non-first-time homebuyers are finding that they can be approved for mortgages throughout Canada. Regardless of the low rates, homebuyers are still finding it difficult to pay their monthly mortgage. As home prices increase, the monthly payments increase as well, putting Canadians in tighter financial situations.
How Much House Can Canadians Afford?
There are many tools available to help Canadians determine how much house they can afford. These tools prevent them from putting themselves in tight financial situations month after month. Affordability calculators are available online. By inputting financial data (such as income and debt), these calculators can give you an estimate of your monthly mortgage payment.
Canada’s stress test ensures that buyers can handle monthly mortgage hikes without defaulting on their loans. It offers tighter rules that will affect some family’s ability to purchase a home, but bypassing the test, you will be more confident in your purchasing decision.
Talking with a bank and a real estate agent about your specific situation is ideal to help you confidently make purchasing decisions.
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