So you’ve found your dream house, but there’s one thing that you need to secure before you can take things any further: your mortgage. Essentially, a mortgage is a loan to buy property. In order to obtain one, you will need to pass a number of thresholds that are related to your income, credit rating, debt, and various other factors. Whether you’ve fallen in love with a home, or you’re simply considering the idea of buying property, it’s important that you understand how mortgages work. Here’s our basic guide to help get you started and put you on track to making one of the largest investments of your life!
What is a mortgage?
A mortgage is a loan to buy real estate or land. The loan is secured against the value of the home, and it is usually paid off over a period of 15-25 years, however the term can be shorter or longer. The lender will loan the money to the borrower who must meet the conditions of the loan, including mortgage repayments and deposit. If the borrower can’t make the payments, this may lead to the lender repossessing the home so they can sell it and get the money back.
How do you get a mortgage?
You are not guaranteed to obtain a mortgage. The application process is very detailed, and you will provide the lender with all the information about the house you would like to buy, as well as your income, credit reports, and other debts. The lender will conduct these checks to ensure that you will be able to pay the monthly repayments. You will also get charged interest on your repayments too, so this is something else to consider when shopping around.
How much do you need to obtain a mortgage?
To get a mortgage, you will need to supply a down payment for the property. This is usually at least 5% of the value of the property. Then, if your application is successful, the lender will give you the rest of the money to pay for the house and the borrower will pay back the loan in monthly instalments. Based on the information you give and your income, the lender will determine your maximum mortgage, which will also depend on the length of the loan.
Getting a mortgage is a huge step, so it’s essential that you know your facts before you go into the process. For more information on obtaining a mortgage in Vancouver or finding real estate, get in touch today and we’ll be happy to talk more about your investment!
Google Plus: Yaletown Realtor Claire LeLacheur’s basic guide to mortgages to help get you started and put you on track to making one of the largest investments of your life