Author: JAAG

It is important to know the financial requirements before making a house purchase. JAAG Properties, a leader in helping people buy homes, stresses the importance of having a good understanding about minimum down payment. This information is essential when you are planning for your ideal house.

How Does the Minimum Down Payment Work?

A minimum down payment is a crucial component of the house-buying process. It is the lowest sum you can pay upfront to get a mortgage. The minimum down payment requirements change according to the loan type and lender. It typically falls between 5 per cent and 20 per cent of the price of the house depending on the purchase price of the house. This down payment affects the remainder of your mortgage agreement by showing the lender you are committed to lowering their risk.

How a Down Payment Influences the Mortgage Rate?

Your mortgage rate is greatly impacted by the minimum down payment for mortgage. Increasing your down payment on a mortgage can be a wise financial decision. Lower interest rates may be awarded to you in addition to lowering the lender’s risk. Conversely, making a smaller down payment results in higher interest rates and the additional expense of private mortgage insurance (PMI). If you default on the loan, this insurance safeguards the lender. As a result, your down payment amount may greatly impact your long-term financial situation.

Saving for your Down Payment When in a Rent-to-Own Agreement

The down payment for a house is different from conventional mortgage agreements with rent-to-own contracts. A percentage of your rent is applied toward the down payment on the property in rent-to-own situations. This can be a fantastic alternative for people who cannot afford to make a sizable down payment upfront.

Why Choose JAAG Properties for Homeownership?

Being able to answer the question, “How much do you need for a down payment?” is a big step toward becoming a homeowner. Potential homeowners are encouraged by JAAG Properties to explore their options, including rent-to-own solutions.

The goal of owning a home can be attainable thanks to these solutions which help you save towards a down payment. If you are considering homeownership, contact JAAG Properties for help navigating the process.

In a market that’s constantly evolving, you’ve probably heard plenty of recent discussion about interest rates and how they affect mortgage holders. If you’re confused by an overload of information, you aren’t the only one! We’ve cut through the financial jargon and translated how interest rates affect monthly mortgage payments into plain English that’s easy to understand.

How Are Mortgage Rates Set?

Your mortgage rate is determined by several factors, including your credit rating, the type of mortgage you apply for, the length of your mortgage term, and the overnight rate set by the Bank of Canada.

Variable mortgages, as the name suggests, have a variable interest rate, meaning that the amount of interest you pay on your mortgage changes depending on the market. Meanwhile, fixed mortgages have their rates locked in for the length of the term.

Your credit rating has a significant impact on the interest rate banks will offer you when you apply for a mortgage. If your rating is lower than 700, you may have difficulty getting approved. As a result, one of the best ways to score a lower interest rate on your mortgage is to improve your credit rating before applying.

What is the Impact of Interest Rates on Monthly Mortgage Payments?

The rate set by the Bank of Canada has the strongest influence on variable mortgage rates. When interest rates increase, so does the cost of a variable mortgage. In contrast, when they decrease, a variable mortgage becomes more affordable.

A fixed-rate mortgage typically has a higher interest rate at the outset, but the advantage is that you are immune to interest rate fluctuations for the duration of the mortgage term (5 years, 10 years, etc.). Your monthly payments remain predictable, making financial planning easier.

How Do Interest Rate Hikes Impact Your Monthly Mortgage Payments?

Interest rates affect you differently depending on whether you own your home yet. As a prospective homebuyer applying for a mortgage, higher interest rates will mean that you can’t afford as large a mortgage, because your monthly payments will be higher.

For current homeowners, those with variable mortgages will see that more of their mortgage payments go towards paying off interest rather than the principal loan. However, the actual payment remains the same. The disadvantage to a variable mortgage is that you’re somewhat at the mercy of the market, and if rates remain high, it will take you longer to pay off your mortgage.

Secure Your Dream Home with JAAG Properties

If you’ve struggled to qualify for a traditional mortgage in an ever-changing housing market, you aren’t alone. We help countless Canadians create a path to homeownership through our Rent to Home Solution, which allows you to live in your dream home while saving the funds to buy it. Apply online today or contact us to get started on your journey towards owning the home you’ve always wanted!

In today’s increasingly tough real estate market, it’s no surprise that many Canadians and newcomers to Canada are struggling to qualify for a traditional mortgage from a bank. While this may be discouraging, the good news is that there are more options than ever for prospective homebuyers to own the home they’ve always wanted.

Reasons Why You May Be Denied a Mortgage from the Bank

Banks are risk-averse, and as a result, there are many reasons your mortgage application may be denied. Your credit rating is an important consideration for any bank, and if you have poor credit or no credit, that’s a top reason for denials.

Additionally, if you have insufficient assets or income to pass the mortgage stress test, or if you’re currently carrying too much debt, your application is unlikely to be successful with major banks.

Mortgage Alternatives in Canada

Thankfully, there is hope, even if you’ve already been denied. We’ve rounded up several alternatives you should consider in the event of a denial.

Private Lenders

Private lenders aren’t affiliated with banks and may be either private lending companies or individuals. Private lenders are more likely to consider higher-risk loans and may overlook poor credit or no credit. However, these loans usually come with a higher interest rate to compensate for the increased risk.

Credit Unions

Credit unions typically adhere to provincial regulations, not federal ones, so they aren’t bound by the national mortgage stress test. They have more flexibility, and they may be more likely to accommodate unique financial situations, such as freelance work.

Mortgage Brokers

Mortgage brokers are financial intermediaries, which means they have access to a wide range of lenders, including some that work exclusively with brokers. They may be able to help you track down a lender that’s more likely to approve your loan.

Rent to Own

Rent to Own agreements are not newer, innovative solution to housing affordability. In these arrangements, you agree to rent your prospective home from a seller for a preset term. During this term, you act as a tenant and save money for your down payment. At the end of the term, you purchase the home from the seller and become a homeowner.

Our Rent to Home Solution is unique because we guide you through every step of the homebuying process. We offer you access to real estate agents and financial planners if you don’t already have one to help you build positive credit, pay down debts, and plan for the future. After a typical term of three years, you’ll own your home! Our Rent to Home Solution allows you to live in your home today without waiting for a lender to approve your loan.

Get Approved for Your Dream Home Today with JAAG Properties

Don’t allow lenders to dictate your future! We can get you into your dream home sooner than you think. The JAAG Rent to Home Solution equips you with the necessary tools and guidance to accumulate savings for your down payment and guides your mortgage approval. Apply online today or contact us for more details!