Buying a home in Toronto can be your biggest financial investment and therefore can be your biggest financial risk as well. There are also the emotional, physical and psychological factors involved in the process. With all of these putting pressures on you, you just can’t a mistake. Some reminders can help you avoid committing it.
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Don’t Fall Easily For A Big Mortgage
Big mortgages are often problematic mortgages. You don’t need an expert mortgage broker to tell you about that. If you are not so clear of the risks and how they can compromise your finances, know that the first problem it can create for you is “getting a negative equity”. This can happen if house prices suddenly fall.
If that happens, chances are you will not be able to pay the house and will have difficulty selling it. The risk that the house will be repossessed will also increase. Make sure that you are clear about the loan-to-value aspect of your mortgage.
This is why it is prudent to get a pre-approval for a mortgage. They will assess you on the following: ability to put the required down payment, your income and your credit score.
Learn From Others’ Mistakes
Everybody makes mistakes, and many mistakes have been committed in real estate and mortgage transactions. On paper, it might look good to you. It might seem very affordable to you, but may not actually be true, especially when other factors, such as lifestyle and maintenance costs, are entered into the equation.
Accepting that the purchase of a home can’t be done within the next few months (even years) or putting a down payment now may put your finances to a disadvantage can free yourself from stress and give you peace of mind. Rather than being in a hurry to get a home, fortifying your bank account can help put you in a more and more comfortable position than where you are in now.
Deal With A Realtor/Broker Rather Than A Bank
Banks have a lot of things to attend to, so they cannot focus on giving you details about your mortgage. In contrast, a broker has all the time in the world to attend to your needs and it is their job to do so.
There are more advantages. Mortgage brokers are the ones who know the neighborhood where you plan to purchase a home. They are also the ones who more knowledgeable about the fluctuations in the real estate market and the mortgage industry.
There Are Fixed Costs To Consider
When you shop around, keep in mind that there are fixed costs to consider. When we say “fixed”, it means these costs are non-negotiable. They include closing costs, condo fees, taxes, utility charges, land transfer fees, moving costs, legal fees, renovation expenses, and inspection fees.
Bear in mind that some of the fees may be charged by the broker or the bank upfront and can be reimbursed later. Know also that switching a mortgage to another provider isn’t free. Check the fees related to it as they are also usually fixed, non-negotiable and are often overlooked by borrowers.
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