How do I get financing for my home?
There are a few options when it comes to securing financing for your home. The most common are private funding or institutional financing. The first is far more risky, expensive and only seeked when you have no other option (ie. bad credit, bankruptcy history) whereas the latter is more common and readily available.
The most traditional method of getting a mortgage is by going through your bank. You may have an advantage by going through your bank if you have a long history with them. Ultimately their rates are usually already set (not necessarily the lowest around), but if once providing all your income/expenses you are right on the edge of getting/not getting a mortgage, your personal history with the lender might be enough to sway them to lend to you.
The most common method nowadays however is to get a mortgage through a mortgage broker, or mortgage specialist. It is really win/win for the applicant, as it is no cost to you (the lenders are paying the broker to bring them clients) and the specialist is searching all avenues (including banks) to try and find you the best terms and rate. And if you are considered high risk (low down payment, low credit rating) mortgage brokers can also apply to the private lenders if traditional lenders are not an option for you. Again, keep in mind these “high risk” mortgages often come with fees to set up, as well as much higher interest rates.
In an upcoming post I will talk more about debt service ratio, percentage down payment, CMHC insurance and other factors that come into play when applying for a mortgage, but I hope this is enough to get you started on your quest to secure a mortgage.
