Having a Pre-Approval letter shows sellers and realtors that a lender has reviewed your income and credit history, determined you’re ready for a mortgage and reserved an interest rate for you. All you need to do now is find the right home.
Mortgage fees such as default insurance premiums and property appraisal fees vary greatly depending on what percentage of the home's value you are financing. Closing costs also vary according to the province you live in and other local taxes.
Lenders consider all the factors from the question, but have little concern about the number of dependants applicants have when assessing their ability to pay their mortgage.
This is referred to as high-ratio financing, and is required by The National Housing Act (NHA). The premiums, which vary based on the size of down payment, are added to the mortgage and financed over the life of the mortgage.
In Canada it's now required that you qualify at an interest rate higher than your actual variable rate offered to ensure you're prepared for potential rate increases. This may impact your maximum purchasing power.
Home equity loans are when a lender gives you a set amount of money and you pay it back over a fixed repayment schedule. A Home Equity Line of Credit (HELOC) is the right to borrow a certain amount of money that is guaranteed by your home. To obtain a HELOC, you must have a minimum of 20% equity in your home.
CMHC mortgages otherwise are provided to any home owner that requires a mortgage amount greater than 80% of their home value. You can be a tenth-time buyer and still qualify for a high ratio mortgage provided you are comfortable with the default insurance premiums.
With the government's Home Buyer's Plan, buyers can withdraw up to $25,000 for each mortgage applicant from their RSP without any holdback for taxes. Committing to repay the RSP funds interest free over the following 15 tax years will avoid any future taxes against the withdrawal.
