Dear Home Buyer,

As your first home purchase specialists, we work on your behalf to find the home and mortgage that suits your needs. Best of all - our service is "FREE"*. 

In this Issue


  • How Much Do You Qualify For?
  • No Down Payment Programs
  • Tips On Improving Your Credit Score

 How Much Do You Qualify For?

Traditional lenders will allow you to spend not more than 32% of your gross income on the mortgage and 40% of your gross income on other loan/credit card payments.  For example, if you gross $100,000 per year, your payments for the year on the new mortgage should not exceed $32,000 (or $2,666/month),  With this amount, it is possible to work backwards to compute the mortgage you would qualify for.   The final amount will depend on other factors such as the interest rate used, maintenance fees (for condos), heating costs, property taxes, your outstanding payments and whether there is a basements suite.

There are some non-traditional institutions that do not require that you follow the 32%/40% cap.  Since they do take a higher risk, their interest rate is slightly higher than bank posted interest rates.   These programs are beneficial if you are paying higher rates on other debts (e.g., credit cards, personal lines of credit).

No Down Payment Programs

There are two zero down payment programs available.  Scotiabank's Free Down Payment program and Xceed's Xecutive Suite zero down payment program.  Both programs are similar in that both target clients with good credit risks - a stable job and a good credit history.  Given that the borrower has no personal investment in the property, the lenders are relying on the borrower's good credit history as a means to justify the financing.  Expect the interest rate to be at or above bank posted rates to account for the higher risk.

 

Tips On Improving Your Credit Score 

A bad credit rating can cost you money especially when you are in the market to purchase a home.  Here are a few tips to follow:

1) Make sure you pay your bills on time.  If you cannot pay the full amount, pay the minimum amount required. 

2) Try not to apply for credit too often.  Having too many credit request imply that you have poor money management skills.  Ideally, you should have no more than 3 credit cards.  Lastly, don't exceed your credit card limit. 

3) Establish a credit history.  If you don't have any credit history, lenders have no way of knowing how responsible you are in managing your debts.

4) Get a copy of your credit bureau.  You can obtain a copy online at www.equifax.ca.  The website has also information on how to get a copy of your credit report by mail.  By reviewing a copy of your credit report, you are able to correct any inaccuracies in your file. 

Resources:

  • BCMortgage.ca - BC's most comprehensive website for mortgages for first time home buyers
  • CMHC - Canadian Mortgage and Home Corporation
  • Equifax - Obtain your credit reports online

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