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Purchasing and owning a home is both a life goal and a financial goal for some people. However, these can often cost hundreds of thousands of dollars, money that most people simply don’t have. While home prices have dropped in areas like Burnaby, most people still need a mortgage to afford a home. A mortgage is essentially an installment loan that is spread out over anywhere from about 20-35 years.
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How to Compare Mortgage Offers in Burnaby
Whether you are in Burnaby or any other city across this country, there are likely multiple different lenders that can help you secure a mortgage. But with so many options, how do you compare one mortgage offer to another? Of course, you need to consider the interest rate. An interest rate difference of even one single percentage point could make your mortgage thousands of dollars cheaper or more expensive.
However, if you believe the interest rate is the only thing to consider, you are wrong. You also need to compare and consider a number of other things such as:
- The term
- The amortization period
- Is the mortgage closed or open?
- Is the interest rate fixed or variable?
- Are any prepayment options available?
- What sorts of penalties there might be
As a result, be sure to take your time and really put in the research when it comes to getting a mortgage. If you simply work with the first place you visit in Burnaby, you could be missing out on some amazing deals or offers from other providers in Burnaby. Not all mortgages are created equally, and it is always important to keep that in mind.
Is the lowest mortgage rate always the best option? Find out here.
Mortgage Pre-Approval in Burnaby
When looking for a home in Burnaby, there are many different options at your disposal. As a result, it can feel very overwhelming. One way to help focus yourself and know what you should be looking for is getting a mortgage pre-approval. A mortgage pre-approval is when the bank has agreed to give you a specific amount of money at a specific rate based on you as a potential home buyer. This means they trust you to be able to afford the home and make the down payment.
They will look at your credit, verify your income, and do a number of other things before pre-approving you for a certain amount. Not only will this help you understand how much you can afford, but having a mortgage pre-approval can also make you a more attractive option for sellers. It means you are serious and have actually taken steps beyond simply house shopping and browsing.
Being pre-approved also means you can act quickly, which is something many sellers in Burnaby will appreciate. While a pre-approval is not a guarantee that you will get the loan no matter what, it is a large step in the right direction. A mortgage pre-approval is typically good for between 60-120 days, depending on the lender. So be sure to not sit on your approval for too long, or it may no longer be valid.
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How to Save Up For a Down Payment in Burnaby?
While you will likely need a mortgage to buy a home in Burnaby, you will likely also need a down payment. This down payment can range, but the minimum down payment in Canada is 5%. Depending on the price of your home, a down payment can be thousands and thousands of dollars.
While this can be tough for some people in Burnaby to save up for, there are some things you can do to better save up for a down payment. These include:
- Spending less on consumer purchases
- Cut down expenses
- Find more ways to make money (more shifts, second job, sell things)
- Prioritize correctly
- Have a budget and stick to it
- Use automatic transfers if you have difficulty saving
So why is it good to save for a large down payment if possible? Well, the benefits are plentiful. First of all, having a large down payment will lower the amount of money that you need to borrow, which will make the home much more affordable in the long run. Next, having a down payment of over 20% will ensure that you don’t need to pay for mortgage insurance, which is usually a specific percentage of the overall price of the home. Of course, a down payment will also mean smaller payments, which are much easier to manage and fit into any budget.
How much you save for a down payment is up to you, but we recommend saving at least 20% to avoid mortgage insurance. Of course, this isn’t always possible, so feel free to save up as much as you deem appropriate.
Finding The Right Mortgage in Burnaby
Getting a mortgage is essential for most people to purchase a home. If you’re in the market for one, don’t hesitate to reach out to Loans Canada. We will be able to help you find a quality mortgage lender in your local area.