Mortgage Basics

Mortgage Basics

When we get down to the basics of life, it’s really quite simple.  Down to its core, all we really need is food, shelter and love.  Everything else is optional.

Shelter can come in many forms.  Living with relatives, renting your home, or the loftier goal of owning your own home.  Although home ownership is not a necessary part of life, it’s a goal for most Canadians.  The good news is that qualifying for your first mortgage is quite simple.  Down to its core, all you need for a mortgage, is downpayment, credit and income.  Although, these are things we don’t usually possess in our teenage years, they are things we begin to naturally accumulate as we enter adulthood.


Income is the most basic of the basics.  Without it you can’t get the other two.  A steady job will provide you with the income needed to establish a credit history and will allow you to save up the necessary downpayment to purchase your first home.  A track record of 2 to 3 years will be needed to show that you can manage the mortgage payments.  Of course the more money you make the more of a mortgage payment you can afford and the bigger your mortgage and house will be.


Now that you’re earning an income, it’s time to start spending some of your hard earned money.  Your credit history doesn’t begin until you’ve receive and start using your first credit card.  A credit card has become a necessity for many transactions.  Renting things from as small as a movie to as large as a car aren’t possible without a credit card.    After a couple of years demonstrating a perfect repayment history on at least two credit facilities you will be ready to qualify for your mortgage.


The minimum downpayment you need to purchase a home is 5% of the purchase price.  For a $300,000 starter home you’ll need to save up at least $15,000.  A disciplined approach to your budget will help you stash away a few hundred dollars each month until you reach your target.  Some may be lucky enough to get some help from a parent or sibling.  Gifts from immediate relatives are acceptable to mortgage companies, and can be a big boost for first time buyers.

Although owning your own home isn’t a basic, the qualifying factors are.  Get a job and a credit card and save your downpayment.  That’s all there is to it.  Work with an Accredited Mortgage Professional (AMP) to keep the process simple and make owning a home a basic in your life.



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