Are struggling with a lot of consumer debt and are finally sick and tired of being behind every month, you might be looking for a course of action to get yourself out of that mess once and for all. Two popular tools to help Canadians deal with their debt are consumer proposal and debt consolidation. But how do you know which option is best for you? Both options have their pros and cons, so here we will explain some of the differences in order to help make your decision a little bit easier.
According to recent mortgage statistics, more and more homebuyers are turning to private mortgage lenders. One of the biggest reasons for this is that the mortgage financial stress test that was introduced at the beginning of this year is making it more difficult for people to qualify for mortgages on the homes that they want. Other reasons for turning to private mortgages include being new to the country and not being able to prove income or wanting to purchase a unique type of property such as a tiny home that the bank won’t finance.
It used to be that Canadians looked forward to mortgage renewal time because it meant that they could negotiate a lower rate with their financial institution. But considering that the Bank of Canada has raised interest rates five times over the last year and is likely to do so again in the near future, this is no longer the case. Furthermore, the new financial stress test makes it more difficult for mortgage holders to shop around. If they cannot pass the financial stress test, they won’t be able to move to another federally regulated lender and this limits their ability to negotiate with their current lender.
If you are ready to take the plunge and finally purchase a home of your own, one of the first steps that you should take is to get pre-approved for a mortgage. Be sure not to confuse mortgage pre-approval with pre-qualification.
Mortgage pre-qualification is a quick process where a lender will determine how much of a mortgage you could qualify for based on a quick assessment of your debts and assets. Pre-qualification however, does not guarantee that the lender will give you a mortgage. Mortgage pre-approval is a lengthier process in which the lender checks you credit and verifies the information that you have given. In pre-approval, the lender is actually making the commitment to provide you with a loan.