Buying a Home: Minimum Down Payment Requirements

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.

How Do Interest Rates Affect Monthly Mortgage Payments?

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!

What Options Are Available When You Can’t Qualify for a Mortgage?

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!

How to Own a Home When Interest Rates Are High

After a year of rising interest rates, many Canadians are concerned about affording homes during this upward trend. High interest rates may mean paying more for your mortgage, but if you’re a prospective homebuyer, don’t lose hope! There are several ways to a buy a new home with a higher mortgage rate.  

How Interest Rates Affect Your Mortgage 

To understand how interest rates affect your mortgage, you have to understand what you’re really paying when you make a mortgage payment. A certain percentage of your mortgage payment contributes to the principal loan—that is, the amount you borrowed to purchase your home. The remaining amount pays the interest you’re accruing on that loan over time. 

Interest rates are set by the Bank of Canada and vary over time. When interest rates rise, your potential mortgage payment also increases, since you’ll be paying more interest on the principal loan.  

Higher interest rates may mean you can’t afford to take out as large a mortgage, and in some cases, it may price out prospective buyers altogether. But don’t give up! Thankfully, there are ways to own a home with higher interest rates. 

How to Own a Home with Higher Interest Rates 

Increase Your Down Payment

The most straightforward way to combat higher interest rates is to increase your down payment on your prospective home. You may also consider other ways to increase your cash upfront, such as paying for renovations or upgrades before move-in. If your mortgage option offers it, you may also pay discount points, which are upfront fees that you can pay to lower your rate and payment. 

Consult your mortgage broker for advice on whether increasing your cash upfront makes sense for your situation. 

Enter a Rent-to-Own Agreement 

If you’re struggling to qualify for a mortgage due to higher interest rates, a rent-to-own agreement may be the way to ensure that you can own the home that fits your needs. A rent-to-own arrangement works by allowing you to live in your new home as a tenant while you save for a down payment to purchase the home at the end of your term. 

Our Rent to Home Solution was designed to help prospective homebuyers navigate the complicated process of owning a home. If higher interest rates are preventing you from owning a home, consider applying for our program, where our experts will help you every step of the way towards achieving your dreams of homeownership. 

Increase Your Budget 

Increasing your monthly budget seems like the obvious solution to higher interest rates, but the obvious solution isn’t always the easiest or the wisest. Before deciding to increase your budget, take into account your spending and savings goals and consider whether they align with a larger monthly mortgage payment.  

While you consider raising your budget, you may also discuss whether it makes sense to use a higher budget to purchase a newer home. New homes often come with manufacturer warranties, energy-efficient builds, and other features that may ultimately lower your monthly costs by saving you money on expensive repairs and upgrades.  

Pave the Way to Homeownership with JAAG Properties 

Your journey to homeownership doesn’t have to be forestalled by higher interest rates. Our Rent to Home Solution can help you own your home faster by allowing you to live in your home while you save up to eventually own it. Apply online today or contact us for more information on how we can help you own your home sooner! 

How Interest Rates Affect Monthly Mortgage Payments

With recent interest rate hikes from the Bank of Canada, many potential homebuyers are wondering how new, higher rates may affect them. Let us help you navigate the ways that rising interest rates may affect your mortgage, both in the short and long term, by answering some of the most common questions we receive.

How Do Interest Rates Affect Mortgage Rates?

How interest rates affect your mortgage depends on what rate you’re approved for and what kind of mortgage you have.

When you apply for a mortgage, your lender sets your rate based on the Bank of Canada overnight rate, your credit rating, your choice of fixed or variable rate mortgage, and the length of your mortgage term.

From there, changing interest rates affect your mortgage if you have a variable rate mortgage, or if your mortgage is up for renewal and interest rates have changed during your term.

What Are the Differences Between Fixed and Variable Mortgage Rates?

Having a fixed rate mortgage means that the interest rate you’re approved for is applied to your mortgage for your entire term. Your mortgage payments remain the same in terms of how much is paying down your principal loan vs interest.

With variable mortgages, your interest rate varies depending on the current rate set by the Bank of Canada. As interest rates change, the portion of interest you’re paying each month also changes.

How May a Rate Hike Affect Me?

For a variable rate mortgage, a rate hike means that more of your payment is paying down interest. The higher the rate, the more interest you’ll be paying with each mortgage payment. If rates climb high enough, you may reach the “trigger rate”, which is when your mortgage payments are no longer paying down the principal loan.

For a fixed rate mortgage, a rate hike won’t affect you during your term. However, if interest rates have risen when you renew, your mortgage payments may increase.

Pros and Cons of Variable vs Fixed Rates

Depending on the economic outlook and your circumstances, either mortgage type may be right for you.

Pros of a Fixed Rate Mortgage

  • Your monthly payments are predictable. 
  • You won’t be vulnerable to rising rates.

Cons of a Fixed Rate Mortgage

  • You may pay more if interest rates fall.
  • If interest rates fall, you can’t take advantage of lower rates.

Pros of a Variable Rate Mortgage

  • You can benefit from falling interest rates.
  • You may pay less interest over time.

Cons of a Variable Rate Mortgage

  • You’re vulnerable to rate fluctuations and may pay more.
  • It may take longer to pay off your mortgage.

Set Yourself Up for Homebuying Success with JAAG Properties

If you’re struggling to qualify for a mortgage, you aren’t alone. Our Rent to Home Solution allows you to live in your dream home while saving for a down payment and building positive credit. Contact us today to learn more about how we can help you on your path to homeownership!

What’s the Minimum Down Payment for a House?

Perhaps the most challenging part of qualifying for a mortgage is making the minimum down payment. If you’re struggling to save, you’re not alone. Fortunately, our Rent to Home Solution is an innovative program that helps homebuyers with smaller down payments afford their home and move in today—not years down the road.

What is a Down Payment?

A down payment is a lump sum of money that you pay upfront when applying for a mortgage. Most lenders require a minimum down payment based on a portion of the purchase price of your new home.

Lenders require down payments to reduce their risk, as it demonstrates that you’re committed to purchasing the home and it reduces the size of your loan.

How Much Do I Need to Save?

Assuming your home is $500,000 or less, most lenders require a minimum down payment of 5% of your home’s purchase price to approve your mortgage application. If your home is between $500,000 and $999,999, you’ll need 5% on the first $500,000, and 10% on the remaining balance.

Depending on how much your home costs, the size of your down payment can vary dramatically, and it can be hard to save money when you’re also responsible for paying rent in another home.

What Are the Benefits of a Smaller Down Payment?

There are benefits and disadvantages to both a smaller and a larger down payment. A larger down payment means that you may be significantly cutting into your savings for emergencies, However, your monthly payments will be much lower.

With a smaller down payment, you can buy and live in your home sooner, and reserve more funds for savings, including for any renovations your home may need. With our Rent to Home Solution, you can work toward purchasing your home for as little as 3% down.

How Our Rent to Home Solution Can Help You Achieve Homeownership

Becoming a homeowner doesn’t have to be an impossible dream. Our Rent to Home Solution allows you to rent your prospective home from us while you save for a down payment to qualify for a traditional mortgage at the end of a set term (usually 3 years).

We can connect you with qualified realtors who will help you find your perfect home within your budget. Once you’ve found it, we purchase the home, and you move in immediately. Simple!

During your term, you’ll be set up on a payment plan: rent, which includes the mortgage, property taxes, property insurance; and a savings credit, which will help you build your down payment. We’ll also pair you with a certified financial advisor who will help you create a budget and improve your credit score.

At the end of your term, you’ll be ready to purchase your home! We’ll match you with a trusted mortgage broker to ensure that you qualify for the mortgage you want. Congratulations on becoming a homeowner!

Build Your Savings and Become a Homeowner with JAAG Properties

Achieve your dreams of homeownership sooner with our Rent to Home Solution! With expert advice and professional guidance every step of the way, we set you up for success on your home-buying journey. Apply online today or contact us for more information!

How’s the next generation ever going to buy a home?

Have you ever considered how the next generation will afford to buy a home?

For many young adults, the dream of future homeownership may seem completely out of reach. They face an unstable housing market, with record high prices and limited affordable inventory. As well, there is the threat of rising interest rates and inflation, which makes ever purchasing a home seem even more unlikely.

Not to mention, by the time they’re wanting to step into homeownership…

  • Most will have struggled to save enough for a down payment
  • Many will have acquired too much debt
  • Some will have had difficulty generating sufficient household income

All of which could prevent them from qualifying for traditional financing and getting approved for a mortgage.

So, what’s the solution?

Options seem few and far between, and the results can be detrimental.

  • The bank of mom and dad
  • Rent and pray
  • Never leave home

For those struggling to get a mortgage, the options appear to be limited and loathsome. No one wants to tap into their parents’ retirement savings to get started. Few people ever get out of the rent cycle after they’re in it. And, who really wants to live in their parent’s basement forever?

These aren’t solutions!

The solution needs to be comprehensive.

It needs to include a plan that gets future home buyers into a house today, helps them build their credit score and save for a down payment, and sets them up to qualify for traditional financing.

The next generation shouldn’t have to give up on their dreams of homeownership. The future of home buying may seem uncertain, but that doesn’t mean it’s impossible.

Despite having few reasonable options available to them, JAAG’s Rent to Home Solution provides today’s young adults with a safe and reliable method of purchasing a home.

Over 200 future homeowners have discovered their true homebuying potential through JAAG’s Rent to Home Solution — A Simple 4 Step Framework that gives newcomers to the housing market a chance to experience homeownership immediately

Check out JAAG’s Rent to Home Solution

By utilizing JAAG’s Rent to Home Solution, future homebuyers can make their goal of homeownership a reality.

They can experience the stability and freedom to live, decorate, and renovate the way they want. They can enjoy the peace of mind and happiness that comes with homeownership. And they can secure financial freedom while investing in their own home.

The next generation doesn’t have to let traditional financing prevent them from becoming a homeowner.

They can put an end to the rejections with JAAG’s Rent to Home Solution. By utilizing the Simple 4 Step Plan, they can get on the path to homeownership today and start enjoying the benefits of owning their own home immediately.