Presently paying monthly rent to a landlord? Have you ever wondered how you would ever be in the position to save enough money for a downpayment on a home? You can get a no downpayment mortgage through many Ontario lenders through a 5% cashback mortgage! Irrespective of where you are located in Ontario, we still have items that will enable clients to acquire a low or no downpayment mortgage to make that first home purchase. Getting a home is not just the most significant purchase you might make in your lifetime, it's also one of the more important investments you may make for you and your family. Since shelter is one of the few purchases that is a necessity and appreciates in value over time, you should consider strategies in which you can break into the real estate market in your area and start saving the thousands in rent you can save over the long-term. Irrespective of where you reside, we can come up with a no downpayment mortgage product to get you on your way to owning your first residence, as it is the most efficient investment you can make. A number of important points to consider when exploring a cash back mortgage is that while there is no downpayment required out of your pocket, the 5% cash back you will get on closing will act as your downpayment. You must have a solid credit history, clear of bankruptcies or consumer proposals and generally need a minimum credit score of 650. Furthermore, you must have a gross debt service (GDS) ratio under 32% and a total debt service (TDS) under 42% in most situations. Although the maximum loan-to-value (LTV) an insured home mortgage can be funded for is 95%, some lenders were able to create money back mortgage products that will help folks who want to search for a home, but cannot come up with a downpayment. The way the lender gets around this rule to provide borrowers what is essentially a 100% loan-to-value mortgage is by writing the borrower a cheque for 5% of the home loan amount which may then be used as a downpayment. Although it would be nice to believe that the lender is being generous by giving you a cheque for 5% of the mortgage amount, you will eventually repay it via a higher mortgage rate than a typical 5-year fixed mortgage. Most cashback mortgage rates are going to be high enough to pay back the bank much more than the 5% offered to the borrower upfront during a 5-year term. Despite the fact that amount of “extra” interest you will likely pay through this type of product differ from lender to lender and due to fluctuating interest rates, we always show an interest cost comparison for all of our clients. Generally, clients believe that paying more interest spanning a 5-year term is better than paying rent to a landlord for another five-years. Consider paying $1,000 in rent every 4 weeks for 5 years. With there being 60 months in 5 years, you've consequently paid $60,000 to a property owner which you'll never recover again. When you find yourself confident that you can't save a 5% downpayment in a realistic time frame, chat with us so we can decide if the additional interest you are going to pay by way of a cash back mortgage outweighs the money it will cost in rent to justify the increased no downpayment mortgage interest cost. Think a money back home mortgage program fits your needs? Contact your mortgage broker so we can consider your options. The Mortgage Centre is available day or night to help you get started!
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