Let's find the right mortgage for you.

Whether you’re already shopping for your next home or just getting started with your research, one of the very first things you should do before you start looking at homes is talk to a lender so you know exactly how much home you can afford.

The last thing you want to happen when you do find your dream home is discover you can’t afford it or get beat out by another offer because you didn’t have a pre-approval letter from a lender.

There are many lending institutions, beyond traditional banks, that offer a variety of mortgage products. Financing options and rates can vary widely, so it is important to do your research and shop around to ensure you get the mortgage that best meets your needs at the best price.

Estimate your mortgage payments and how much you can afford with our calculators.

You may have more questions about qualifying for a pre-approved mortgage. We’ve got you covered. We’ve put together this useful guide that answers the top questions we hear every day.

  1. Preparing Your Budget.
  2. Mortgage Loan Insurance. Do you need it?
  3. Understanding Your Budget.
  4. The Ontario Land Transfer Tax.
  5. How to get Pre-Approved for a Mortgage.

1. Preparing Your Budget to Buy Your Dream Home

Determining your budget and what you can realistically manage can be stressful. Where do you even begin to answer such a loaded question?

First, you can start by passing a mortgage stress test. This stress test will help you prepare when qualifying for a mortgage loan at a lender.

The mortgage stress test will help you set a realistic goal and show you what your payments would be at a qualifying interest rate. These interest rates are typically higher than the actual rate in your mortgage contract, which is something you need to keep in mind when planning your budget.

The qualifying interest rate your lender will use for the stress test will depend on whether you need to get mortgage loan insurance. If you need mortgage loan insurance, the bank must use a higher interest rate.

Take Me To The Mortgage Stress Test

2. Do You Need Mortgage Loan Insurance?

If you need mortgage loan insurance, the bank must use the higher interest rate of either:

If you don’t need mortgage loan insurance, the bank must use the higher interest rate of either:

3. Understanding Your Budget

Now that you have a rough understanding of how lenders see you from a finance perspective, you can now understand your budget a little better.

Don’t worry if you did not pass the stress test; there are additional lenders and Credit Unions that are not federally regulated and do not need to use the mortgage stress test.

How Much Can I Afford?
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4. The Ontario Land Transfer Tax

When also planning your budget, be sure to calculate the Land Transfer Tax. This is based on the purchase price of the property. If you want to see what the cost of this could be, use our Land Transfer Tax Calculator below.

Land Transfer Tax Calculator
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5. All About Mortgage Pre-Approval

Mortgage brokers compare mortgages from banks, credit unions, and trust companies, to find the best options for their clients. Because mortgage brokers have access to different financial institutions, they can often negotiate better rates and terms. Big brokerages are also able to negotiate volume discounts that they then pass on to their clients.

To get pre-approved, you need to meet with a mortgage broker or lender. To find out how much you can afford to borrow to purchase your home, you will be asked questions that will need documentation.

There are 4 key factors to acquiring a pre-approved mortgage:

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Credit Score

It is a measure of your financial health, and it shows the lender if there are any risks associated with lending you money.

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Down Payment

In Canada, the minimum down payment is 5% of the home’s purchase price. If you decide to put down less than 20%, you will need to acquire a mortgage default insurance to help protect your lender in case your loan defaults.

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Debt Service Ratios

These are two calculations that lenders use to determine the largest monthly mortgage payment you can afford; this is based on your current monthly income, debt, and expenses.

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Documentation

A list of documentation you may need to provide is your identification, length of time with an employer, proof of income, proof of down payment and information on other debts.

As you can see financing options and rates can vary widely, so it’s important to do your research and shop around to ensure you get the mortgage that best meets your needs at the best price.

At easy Home Realty, we work with experienced mortgage specialists. We’d be happy to put you in touch with one of our preferred partners or help you in any other way we can to secure the best possible rate and terms for your home purchase.

More Resources & Calculators

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Buying your first (or next) home can be stress inducing and exhilarating all at the same time, we’re here to make the process as smooth as possible.

Take a look at our Mortgage Rates Calculator, Ontario Mortgage Payment Calculator & Ontario CMHC Insurance Calculator. Feeling overwhelmed? We’re here to help, contact us today and we’ll be happy to work with you!

If you have any questions or need assistance, feel free to reach out to our team today.






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