Your Cheat-Sheet to Getting Your First Mortgage in Canada

Are you ready to take the first step into buying your first home? It's a monumental milestone, but it's not without its challenges. Between navigating mortgage options, understanding credit requirements, and saving for a down payment, the process can feel overwhelming. At Mortio, we specialize in making homeownership accessible for first-time buyers, entrepreneurs, and young professionals. This guide will walk you through everything you need to know to secure your first mortgage in Canada.

Understand What a Mortgage Is

Basically, a mortgage is a kind of loan taken by you to finance your house. You pay back this loan after some time with interest included, usually monthly. Mortgages are available in different terms and rates, which can be fixed or variable. Choosing the right mortgage depends on your financial situation and future goals.

What’s your credit score?

Your credit score is an important means to criteria for approval of your mortgage. It is used by lenders to determine your capability of repaying the loan. In Canada, a score of 680 or higher is considered good. If your score needs improvement, start by paying off outstanding debts and ensuring all bills are paid on time.

Save for a Down Payment

In Canada, the minimum down payment depends on the price of the home:

5% for homes under $500,000

10% for the portion of the home price between $500,000 and $1 million

20% for homes over $1 million

Saving for a down payment takes time. Open a Tax-Free Savings Account (TFSA) or use the First Home Savings Account (FHSA) to grow your savings tax-free.

Thoroughly Research Your Mortgage Options

There are two major types of mortgages in Canada:

Fixed-Rate Mortgage: Your interest rate does not change during the term.

Variable-Rate Mortgage: Your interest rate changes with the market.

Each option has advantages and disadvantages. A fixed-rate mortgage provides stability, while a variable-rate mortgage can save you money if the rates decrease.

Get Pre-Approved

A mortgage pre-approval will give you clarity on how much you can afford, and it also signifies to the seller that you're a serious buyer. In that process, lenders will check your income and debts, as well as pull your credit score, ultimately to determine how large a loan they are willing to extend.

Don't Forget Additional Costs

In addition to the down payment and monthly mortgage payments, there are other costs, including:

Closing Costs: Legal fees, land transfer taxes, and title insurance, which usually range from 1.5% to 4% of the home's purchase price.

Property Taxes: Annual taxes on your home's assessed value.

Home Insurance: Covers your home and belongings.

Finalize Your Mortgage

Now that an offer has been accepted for your home, it is time to complete the mortgage process. At this point, your lender orders an appraisal that may protect against potentially lending more money than a home is actually worth. Do the final signings, and get moving!

Why Choose Mortio?

At Mortio, we make the mortgage process less complex with personalized guidance and competitive rates. Whether you're self-employed, a first-time buyer, or navigating unique financial circumstances, our team is here to help you every step of the way!

Securing your first mortgage doesn’t have to be daunting. With careful planning, the right financial tools, and a trusted partner like Mortio, you’ll be well on your way to homeownership. Ready to take the first step? Contact us today to start your journey!