Welcome to Homebuyer's School,
brought to you by Brookfield Residential.
Hi everyone and welcome to another
edition of Homebuyer's School.
Today I'm joined by Mujtaba Syed,
a mobile mortgage specialist with
TD Canada Trust and today the question
we're gonna answer is:
How to get pre-approved for a mortgage
with a student loan or any other financial debt.
Yeah absolutely, so your current
financial obligations definitely plays a role in your pre-approval. Any debts
outstanding, it could be a student loan, it could be a car loan, it could be many
other things. So our pre-approval will actually help
you kind of get an idea. We'll break down what your payments are and we'll
actually help you decide what's the perfect home for you, if you're
comfortable with all your payments and the mortgage payment, that's the best
place to be. You should be able to kind of cover your current financial
obligations and also the mortgage. It also might even help you to kind of
decide, "should I pay off those loans first, should I pay off my student loans
or my car loan so I can get approved for a for, a larger mortgage to get you into
the perfect dream home." Once again, these are just great question to have with
your specialist. It's all about having that discussion and it should be
open-ended to kind of have that discussion and see exactly where you see
yourself to be. It should be a long-term goal, it should be a long-term plan and
really have that discussion with your specialist and lender.
How much do financial debts really
impact the ability to get pre-approved for
a mortgage?
Yeah absolutely, that's, like I said, it's
it's a very, very important part.
It could have a major impact on your
pre-approval depending on the debts that
you currently have, your repayment
history with that debt and many other
things. So it's, it's a very important step to
kind of get an idea of your financial obligations and should also factor into
your own monthly budget that you've kind of worked out for yourself after or
before you've seen that specialist, just find out exactly how much you want to
spend on your mortgage or on your home so you can actually stay on top of your
financial obligations. So I've heard a lot about this, an
insured mortgage. Is it a different process - first of all, what is it right?
What is an insured mortgage and is it a
different process in terms of getting a
pre-approval for it and why would I want
to get pre-approved for that?
Absolutely, so the process should still be the same. Insured mortgage is
technically just what we call default insurance on a mortgage. So in Canada
it's actually - it's a legal obligation if you're putting less than 20 percent
down to have default insurance, which is just - it just makes the bank's more
comfortable in lending to you. So without the default insurance you
need to come up with 20 percent down to buy a house which sometimes could be a
large amount. It could - it could actually take you a very long time to save up
that, but with default insurance it's a benefit to some clients
and to buyers. It gets you into market sooner with the minimum of 5% down and
get you out owning a home sooner. Does that, does that default insurance or
insured mortgage - does that, is a part of your monthly payment plan or do you
have to put it up front? Yeah absolutely, it could be done either
way. We could definitely build it right into your mortgage so it's not you part of your
payments or you could pay it up front. A lender will definitely ask you those
questions and say what meets your needs the best. If it's - if you feel like you
rather just pay for all at once and through your mortgage payment, they can
definitely add it or if you feel like you rather just pay it upfront, you can
definitely do it that as well. Do you have a choice? So let's say I want
to get pre-approved and I don't have my 20% right and I'll have you know generally
good credit score and you know, I meet all the criteria for the - let's
say; the bank or mortgage specialist. Can
I say, "Hey, I want to choose a insured
mortgage versus - or it's only for special cases?
Yeah so technically if you have less than
20% down, it's the only way to technically purchase a house is
get that insured mortgage. Once again, it is a benefit. Look at it as a benefit so
default insurance and it gets you into a home sooner and with that 5%.
sometimes you need to sit down and talk and say, "I could, I could save that 20%"
but saving that 20% keeps you up from getting into the market sooner where
you've technically missed out. You might have missed out any appreciation in the
market. How many more years of rent you might have had to pay to save up that.
Sometimes, it doesn't make sense to save that 20% and get in sooner. Once again,
it's a conversation to have with your
specialist and your lender to see what best fits your needs. If you want to get
in sooner or you can rather wait and get in later. It just depends on
your financial situation. Do you have anything else to add in terms
of insured mortgage or mortgages with financial debts?
Yeah absolutely, so there's a lot of benefits in getting an insured mortgage
and you can actually go on their websites.
One of the insurance providers in Canada
is called CMHC which is called the
Canadian Mortgage Housing Corporation.
They're very, have a very detailed benefit on
their website. It also gives you a lot of helpful tips on their website about
getting a home and buying a home. The
other one's called Genworth Insurance
and the other one is called
Canada Guaranty and they all provide
very similar things,
they might have little different things here and there but it's also a benefit
because there are certain guidelines that they can help you with.
If you're going through a hardship, most insurance companies have things built
into their insured mortgages where they can actually help you. They can help you
with your financial obligation, they can work with you, they can do other things,
so they can actually be very helpful to have.
Perfect, well thank you very much Mo.
Thank you very much everyone for joining us and we'll catch you next time.
That's another edition of Homebuyer's School.
Tune in next time for more expert tips
and tricks and visit
www.homebuyersschool.ca to bring you
one step closer to
finding your dream home.
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