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Regardless of where you live, whether it’s a large city or a small rural town, chances are you’ll need or want to purchase a home at some point in your life. One of the best things about living in Quebec right now is that it has one of the most affordable housing markets in Canada, especially compared to other large provinces like Ontario and British Columbia.
So, what comes to applying for a Mortgage in Quebec, Loans Canada has all the information you need.
For more information about loans in Quebec, click here.
Mortgage Insurance Rules
One of the most important things to know before actually trying to secure a mortgage in Quebec is the mortgage insurance rules in Canada. For those unfamiliar, mortgage insurance in Canada is mandatory for those with a down payment between 5% (to purchase a house in Canada you must have at least a 5% down payment) and 19.99%. This insurance is in place to protect lenders in case a borrower defaults on their mortgage. If you have a 20% down payment, or higher, you won’t be required to pay this mortgage insurance.
Read this to learn more about high ratio mortgages and mortgage default insurance.
This mortgage insurance will often cost people around 2-5% of their total mortgage but allows a much greater percentage of the Canadian population to enter the housing market. There are many helpful calculators online that can help you decipher how much mortgage insurance you will likely be responsible for. However, there are some rules and requirements for mortgage insurance that you should know about, such as:
- The maximum amortization for insured mortgages is 25 years, so a 30 or 35-year mortgage in Quebec cannot be selected if you need mortgage insurance.
- If the home that you purchase is between $500,000 and $999,999, a higher down payment is required. It remains 5% for the first $500,000 and then 10% of the remaining amount, so be sure to account for that when saving.
- If you buy a home worth over a million dollars, you will be unable to get mortgage insurance and because of this, you need a 20% down payment for these homes.
- Mortgage insurance can often be paid off in a lump sum up front or can be added to your recurring mortgage payments.
What’s the difference between a mortgage term and an amortization? Find out here.
How to Save For a Down Payment
As you can see, having a down payment is one of the most important factors involved with purchasing a home with a mortgage in Quebec. However, saving money is something a lot of us aren’t too good at. So how are we supposed to save the tens of thousands of dollars often required for a down payment? Well, there are a few things you can do.
- You need to prioritize. You will need to “tighten your belt” and limit things like eating out, vacationing and other “wants” in order to save the money for your down payment.
- Downsizing your vehicle can be a good way to get enough money to beef up your down payment. Or, if you and your significant other have multiple vehicles, it could make sense to sell one of them to get more for your down payment. You can also consider a certified pre-owned vehicle.
- Saving money is hard when you are also dealing with debt. As a result, paying off things like your credit card or car loan before starting to save for a down payment is a good idea. Need some debt management tips? Try reading this.
- You should take a look at your budget and see where you are spending too much money and look to cut back to give yourself the best chance of successfully saving enough for a solid down payment.
How to Compare Mortgage Offers In Quebec
Once the down payment situation is covered, it‘s time to find the kind of mortgage you want. However, with so many different lenders out there with different mortgage types and terms, how do you know which one to choose?
Why do different mortgage lenders offer different mortgage rates? Click here to know.
Well, the first thing to do is make sure you visit a variety of different lenders and never simply work with the very first one you visit, as you will never know the other deals you are missing out on.
Not sure how to compare lenders in Canada? Check this out.
It is a good idea to compare offers from a variety of sources before deciding to select which one you want. While comparing based on the interest rate they offer is common, that is not the only thing you need to consider. Other things to compare include:
- Prepayment penalties
- Is the mortgage opened or closed?
- Amortization period
- Fixed or variable rate?
By looking at all of these different factors, you will be able to decipher which mortgage is best for you.
Here’s what to do if mortgage rates rise while you’re trying to buy a house.
Can I still qualify for a mortgage with bad credit?
Where can I get a mortgage in Quebec?
What are prepayment penalties and privileges?
The Right Mortgage For Your Needs
Finding the right mortgage in Quebec that meets your wants and needs isn’t always easy. However, at Loans Canada we know we are capable of matching up your needs with the perfect mortgage for you.