As you build equity in your home. Calculate your equity by:
Find out how much your house is worth in today’s market (not how much you paid for it)
Find out how much you currently owe on your mortgage
Subtract what you owe on your mortgage from the current value of your house.
Refinancing allows you to borrow up to 80% of the value of your home minus what you still owe on it. For example, if your property is currently worth $500,000, you may borrow up to $400,000 (80 percent of the value)
The best time to refinance is based on your unique financial situation. It’s preferable to refinance your mortgage before it comes due (instead of renewing it), but you can do so at any time (and, depending on the length of your term, it may be beneficial).
1. You’ve decided to buy a home, so you’ll need to provide documentation of a steady income. You must show that you have a consistent source of money.
Whether you’re employed or self-employed, mortgage lenders will want to see that you have a steady income and can keep up with your payments. You may be asked to provide a letter of employment confirmation, current pay stubs, and Notice of Assessment forms from the Canada Revenue Agency (known as CRA) to demonstrate that you have a reliable income.
2. A good credit history is required.
Mortgage lenders always check your credit history. This reveals if you have debt, how much you owe, whether or not you’ve kept up with your credit card payments, and how many creditors you have, to name a few things. Equifax & TransUnion Canada provide free credit scores. It’s a good idea to get your score before contacting a mortgage broker, so you know what you’re dealing with in terms of your eligibility for a mortgage. You may need to pay down some debt and/or build up your credit score before applying.
Even if you are not seeking for a mortgage, it is a good idea to monitor your credit history on a regular basis to ensure that everything is correct and that you do not find yourself in the dark about your money.
3. You’ll need minimum 5% down payment
This all boils down to whether you have enough cash on hand to put a down payment on the house you desire. For example, a home valued at $500,000 will require a greater Down Payment than one worth $250,000. This is also true if you’re trying to purchase your first property; in that scenario, only 5% of the house’s value is required as down payment. However, if you already own a home and are looking to purchase another, you will likely be asked for a 20% Down Payment.
4) You’ve found the property you wish to purchase
The lender’s security is the real estate you want to purchase. If you are unable to repay your mortgage, they may have to put the property back on the market. As a result, they want to make sure that the house will sell quickly and without any major problems. Mortgage lenders in Vancouver, for example, frequently avoid leaky condos.
A certified appraiser must perform a physical examination of the property to determine its state and market value.
Refinancing a mortgage generally takes 48 hours, although it can take longer depending on the process. For example, because we must call in a professional to assess your property value, it might take longer. Make sure you have all of your application information available and that you understand the procedure before beginning the process (and completing it as quickly as possible).