It’s fair to say that Ottawa is one of the most popular places to live in Canada. It’s the country’s capital and home to nearly one million residents. You would think this popularity would lead to an expensive housing market, but that isn’t actually the case.
While the year-over-year change in average price of a house in Ottawa, as well as the rest of the country, has been on the rise, the current average home price is still below the national average. As a result, if you live in Ottawa, buying a home could be a good financial choice. However, when thinking about mortgages, it is important to consider more than just the total amount you want to borrow.
Looking to enter the Canadian housing market today? Here’s how you can do it.
How to Compare Mortgage Offers?
While the total amount of the mortgage is definitely something to think about, there are many other things to consider when it comes to your mortgage. First and foremost, you need to think about the interest rate. The interest rate you have will dictate how much you end up paying back over the lifetime of the loan. You want to get the lowest interest rate possible to save as much as you can.
However, there are a number of other things to look at when comparing one mortgage offer to another. These include things like:
- The term
- The amortization period
- Is the mortgage closed or open?
- Is the interest rate variable or fixed?
- Are there any prepayment penalties, options or restrictions?
All of these factor into which mortgage is widely considered better than another. Of course, certain lenders will only offer certain loans or mortgages. So in order to get the best mortgage possible, you need to visit a number of different lenders and see the sorts of deals that they have. Without visiting multiple lenders, you might miss out on a great option. Once you have found the right lender and the right mortgage for your needs, you should feel comfortable enough to apply.
Read this if you’d like to negotiate the best mortgage contract this year.
Check out this infographic to learn how to go from un-bankable to bankable.
How to Save For a Down Payment in Ottawa
While getting a mortgage is probably the most important step to in the home buying process, it isn’t the only thing you need to do. Another important thing to remember is to save up for a down payment. A down payment is an up-front lump sum payment that you make to offer the lender some assurance that you can afford the loan you are taking. Generally, down payments for homes are anywhere between 5% and 20%.
You want to make the largest down payment you can reasonably afford, as it can often get you a better interest rate and thus, the loan will cost less over the years. Also, a higher down payment will mean smaller payments, less (or no) mortgage insurance and potentially even a shorter amortization period.
Not sure how long you should amortize your mortgage for? Find out here.
So just how do you save up for a down payment? Well, the best way is to simply create a separate bank account and put money in it each and every month. You may need to cut down discretionary spending and potentially eliminate some expenses, but saving for a down payment is worth it. Other ways to save are to skip the vacation, borrow money from friends or family, sell an asset, or even sell an investment. How long you save for the down payment is completely up to you and will depend on how large you want it to be.
Click here if you think you’ll need to borrow money for your down payment.
Hidden Costs of Buying a Home in Ottawa
While your mortgage and down payment are likely the largest costs you will incur when buying a home, they are not the only ones. In fact, there are a number of “hidden costs” that you will be responsible for that need to be considered. These are things like:
- Moving costs
- Taxes (property taxes, welcome taxes, land transfer taxes, etc…)
- Home inspection
- Closing costs
- Legal costs
As you can imagine, these costs can quickly and easily end up being thousands and thousands of dollars. How much each of these things cost exactly will depend, but it is a good idea to be aware of them. If you cannot afford these hidden costs, it is best to refrain from buying a home until you are able to.
Want some information about mortgage closing costs in Ontario? Check this out.
Helping You Find a Great Mortgage
Looking to buy a home in Ottawa and need a mortgage? If so, feel free to reach out to Loans Canada. We will work with you to find a great mortgage lender in your area to get you set up with the right mortgage for your needs, no matter what they are.