Are you planning on settling in your own home yet are not certain about the available options in line with new mortgage rates? You are part of a growing community with people who have yet to understand these rates in general.
It was late last year when the government changed things up a bit. They imposed addendums to the existing regulations on Canadian mortgages. As a result, the entire process became more complicated overnight with intent borrowers having more questions than answers to their queries.
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One of the notable changes that took place is the specificity of mortgages. Before, there were simple tiers for financing. After the changes were applied, financing rules now vary from borrower to borrower. It is in times like these that you really need the help of an experienced mortgage broker.
A mortgage broker is a professional who can help you land your perfect home by helping you find the best financing options for the property. Apart from finding you the best deals, the broker can also assist you by negotiating rates. He will also help you file paperwork from the application phase to the time when you need to settle payments to the lender.
As of the beginning of the fourth quarter in 2016, the primary changes to mortgage regulations include the abolishment of refinancing options for borrowers.
Now this is rather problematic especially when there are people who have no control over the turn of their finances. Refinancing provides them with the opportunity to apply for new funding should emergency situations arise and they are unable to meet payments.
The reduction of amortization to 25 years is another step in the wrong direction. Usually, the maximum is set at 30 years. With this reduction, borrowers no longer have a better option to extend payment terms and reduce their monthly mortgage obligations.
And to qualify for a government-mandated mortgage, borrowers should have properties that are less than a million dollars in value at the time of purchase. The rationale for this is that those who are able to afford homes beyond this limit surely have the capacity to get their funding elsewhere. This increases financing opportunities for those who really need it.
However, new regulations stipulate that borrowers need to follow the country’s benchmarked rate for mortgages. You need to understand that this rate is significantly higher compared to contract rates. As a result, you get less funding when you apply for a loan. It has been said that this new rule reduces your potential financing by as much as 25%. This applies to 5-year fixed loans.
Finally, your credit score and loan amount will also have a direct effect on the amount of insurance that you need to pay for. These will also affect your overall mortgage rate.
Now that you’ve read about the new regulations, it makes hiring a professional broker all the more necessary. With a pro in tow, you have someone with informed insights to guide you throughout the confusing process of finding the necessary financing for your home. So make sure that you find a reputable broker to work with.