What You Need to Know About Getting a Mortgage in Ontario

Are you planning on applying for a mortgage in the near future? If you live in Ontario, then you need to read this article before you start home shopping.

I just helped a friend figure out their whole mortgage situation. It wasn’t exactly a simple process. There’s more to buying your first home than simply falling in love with the first property that you see and then moving in the next month.

Here’s what you need to know about getting a mortgage in Ontario:

You need to have a decent amount of savings

You can’t just put a house with little money down anymore. You have to save up. Lowest Rates recently covered the new down payment rules going into effect starting this month. It’s going to impact those in places like Toronto more than those hoping to buy a home in a town in Saskatchewan.

Long story short: start saving right now. The larger your down payment, the higher your chances of obtaining a mortgage. Gone are the days of small down payments just to get your foot in the door. Plus, you’ll get a better deal when you have a bigger down payment.

A home isn’t going to be cheap in a big city in Ontario

Okay so this is almost the same thing, but I really need to stress the point of finances.

Here is what this article in the Toronto Star has to say about getting a mortgage in Ontario, in particular, if you want to live in Toronto:

“Toronto’s record house prices could soar a further 17 per cent by the end of 2017 as the lack of supply in the face of unrelenting demand continues to drive prices far beyond the rate of inflation, says the chief economist of Central 1 credit union.”

The article goes on to mention:

“He anticipates that Toronto home prices, which averaged $573,183 in 2014 could soar to $670,000 by the end of 2017. Ontario house prices, which averaged $430,984 in 2014, could hit $496,000 during the same time.”

Think about those numbers. Can you save 20% for a down payment on a $500,000 home? Most young college graduates are struggling to go out on the weekends. This might mean that you have to stay at home longer, consider moving to a small town, or rent for now.

You need to work on your credit score

A friend happens to be struggling because of their credit score. Many of us wait too long until we start thinking about this aspect of buying a home. I personally started working my credit when I was 18 by fluke (I thought I would look cool with a credit card).

Not only do you need to save up for a solid down payment, but you also should think about your credit score. The loan provider will look at your credit score to see if they can even trust you with a mortgage. If you have too much outstanding debt or a poor credit history, then you’re going to have to fix that first before you do anything else.

Buying a home isn’t like deciding where to go for dinner, especially if you want a mortgage in Ontario. This is a decision that needs to be taken very seriously. You’re going to have to change your entire life around if you want to buy a home.