Many young Canadians dream of one day owning a home. But for far too many, this goal feels like it is out of reach. Obstacles such as saving a big enough down payment, having good enough credit, and simply passing the mortgage stress test can seem like insurmountable issues. Fortunately there are ways to overcome these difficult obstacles.
The following are a few of the most common obstacles facing would-be first time homebuyers in Canada, along with some solutions to overcome them.
Obstacle #1: Saving a large enough down payment
If you are not independently wealthy, chances are that you will need to get a mortgage in order to buy a home. But even with a mortgage, most lenders will require a down payment. You can save for a down payment in a number of ways including good old fashion budgeting, getting rid of that second car, or working extra hours.
But there are also government programs that can assist you with getting your down payment. For example, first time homebuyers in Canada may borrow money from their RRSP. And recently, the federal government introduced the First Time Homebuyers Program which you may also be eligible for.
Obstacle #2: Overcoming bad credit
While it is possible to buy a home with poor credit, you will have a much easier time getting a mortgage with a great rate if you have good credit. If buying a home is still a few years off, take steps now to repair your credit. Make sure that you are paying at least your minimum balances off on time every month. Also, avoid applying for big loans before you apply for a mortgage.
If you do not have time to repair your credit, you can probably still get a mortgage but you will want to consult with your mortgage brokers. There are lenders who specialize in helping people with less than perfect credit scores, but you will want the help of your mortgage broker to make sure that you find a reputable lender.
Obstacle #3: Not passing the mortgage stress test
At the beginning of 2018, the federal government introduced new legislation that required all federally regulated lenders to impose a mortgage stress test on homebuyers. Suddenly this meant that people could not qualify for as high a mortgage as they could previously.
In this scenario, you basically have three options – improve your financial situation by saving a bigger down payment, getting a better job, etc.; settle for a less expensive home so that you can pass the mortgage stress test or; get a mortgage from a provincially regulated lender such aa a credit union or alternative lender.
Contact Akal Mortgages today
If you are looking to purchase your first home, Akal Mortgages can help you overcome these and other obstacles. Contact us today for a consultation.
When we say YES! We stand behind our promise.®™
