Debunking five common mortgage myths that first-time home buyers face
Applying for a mortgage as a first-time home buyer can feel like a huge and complicated challenge. And while careful research is key to demystifying the process, it can be difficult to separate fact from fiction when rumours and horror stories start filtering through!
With this in mind, we debunk five of the most common mortgage myths that first-time home buyers often encounter.
Myth 1: You won’t be approved for a mortgage if you are self-employed
Whether you are a freelancer or a gig worker, applying for a loan as a self-employed borrower may seem impossible because the shifting nature of your income can be tricky to document.
However, being self-employed doesn’t mean you won’t be approved for a mortgage. Alternative mortgage lenders have solutions designed with your unique circumstances in mind. These lenders take a wide range of income sources and documents into consideration to determine which of their products is right for your needs.
Myth 2: A rough patch that damaged your credit will disqualify you from a mortgage
Sometimes, unfortunate events in your life can bruise your credit score. Untying financial knots after a divorce, for instance, can lead to a period of unpaid bills. Or taking on additional expenses following the untimely death of a family member can lead to more debt on your credit cards.
But while having a good credit score is always a plus, a good alternative lender looks at the bigger financial picture by understanding the circumstances of your story.
Myth 3: You won’t qualify for a mortgage if you are new to Canada
Canada is expecting to welcome 411,000 immigrants this year – and all of them need a place to call home! But getting a home loan approved with no established credit history can be daunting.
While it’s certainly helpful for newcomers to first build their credit history in Canada, alternative lenders have solutions for immigrants. These programs evaluate a borrower’s entire financial story, including factors such as future earning potential, to offer a variety of options.
Myth 4: The maximum length of time to pay off a mortgage is 25 years
There is some truth to this myth, because the maximum amortization period for insured mortgages with down payments below 20% is indeed 25 years.
However, the length of time to pay off uninsured mortgages with down payments of 20% and more can be longer. In fact, the amortization period on Home Trust’s Classic mortgage is up to 30 years!
Myth 5: A bank is the best place to get a mortgage
The best place to get a mortgage really depends on your own circumstances. Some first-time home buyers will find that a conventional mortgage at a bank is probably the best option for their needs. But other buyers may require working with a lender that considers other factors beyond a high credit score or a full-time job.
A mortgage broker will be able to connect you with a lender with the best solution for your situation, such as alternative options offered by Home Trust. To learn more about these options, visit hometrust.ca/mortgages.
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