What is and how to obtain a mortgage?
What is and how to obtain a mortgage?
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What is a first Mortgage?
While the term “first” often leads to confusion, it’s very important to know that first mortgage refers to the position of the lien against the property, not the first house the home buyer has purchased. It is the primary lien against your real estate, taking priority to all other mortgages.
It takes precedence over every other claim on a property in case there is any default on payments, which also means that the first mortgage company receives its payment in full, before other liens or mortgages associated with a property are paid off. So first mortgages services are lower risk.
What is required to obtain a first Mortgage?
Full time employment/proof of income
The bank isn’t going to give you a mortgage unless you have stable income that can cover the mortgage. For employed first time Home Buyers, you need to be permanent and full time working for a minimum of 3 months and not on probation. If you’re permanent part time then you must have proof of income by way of Notice of Assessment and T1 Generals for at least 2 years.
Good credit rating
The banks usually need pristine credit or they won’t even consider you as a mortgage candidate. If you have inconsistent credit, then it’s probably best to head to a mortgage broker instead. Most institutions require a credit or beacon scores of above 640-680 to qualify for a mortgage with the best rates and little down payment.
Verifiable down payment
The minimum down payment is 5% to purchase a home in Ontario, subject to maximum price restrictions. In addition to the 5% you must be able to confirm that you can cover costs incurred to close your mortgage. These costs may include legal fees, appraisal fees, survey certificates etc.
Online Approval of your Application
Acquiring a mortgage pre-approval if you plan on buying your dream home in the near future is essential to secure an interest rate guarantee from the lender. The pre-approval process speeds your application process so that you can enjoy a smooth closing.
What is a 2nd Mortgage?
A 2nd Mortgage typically refers to a secured loan (or mortgage) that is secondary to another loan against the same property. Please note, a 2nd Mortgage does not replace your existing first mortgage, it’s merely another mortgage on your home – a loan secured against the property.
In real estate, a property can have many loans or liens against it. The loan which is registered with county or city registry first is called the first mortgage. The loan registered second is called the 2nd Mortgage. A property can have a third or even fourth mortgage, but those are not as common.
Why risk your home with a 2nd Mortgage?
These types of mortgages are appropriate for times when you need a lot of money. Taking out a big sum of money requires you to put up collateral and real estate holds the value that is needed as collateral against default. Many second mortgages are used for debt consolidation, home renovations, home equity lines of credit and buying more real estate.
Why would you want a 2nd Mortgage over just adjusting your current first mortgage?
Initially, it is fast and simple because the approval is based on your home equity and not your earnings, your job stability, or whether or not support payments are being received or paid on time. Secondly, for one reason or another you would prefer not to touch your current 1st mortgage loan financing.
How we can help you!
We can help you to find best mortgage rates, which ensures a smooth and painless home buying process. Also, If you own your home and have a sizeable equity in your home, You can gain access to get the best 2nd mortgage re-extend terms in the shortest time. Our team would be more than happy to answer any questions you may have. Contact us today at 647-996-1380 or 416-559-6600
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