A lot of different miscalculations can render a mortgage loan unfavourable, and some of them include too small or too large numbers, bad timing, poor choice of a loan type and administrative errors.
Not all purchases are the same. If you buy a wrong pair of shoes, it is relatively easy to get a new one, but if you get stuck in an unfavourable mortgage agreement, you’ll be feeling the consequences for decades. That’s why first-time home buyers must pay good attention to avoid a number of hidden traps on this path, including:
Buying too small house
It may be difficult to fathom now, but you might end up living in the same house for a very long time. With that in mind, it would be unwise to select too small space that can’t be significantly upgraded in the near future. Families tend to grow over time, and even lifelong bachelors could start yearning for an extra room as they get older and their interests and hobbies multiply.
Choosing a wrong moment to take out a loan
As you are probably aware, APR’s are rarely standing still, and in turn, the conditions for a house loan could be better or worse than normal at a given time. This is one of the reasons why first-time time buyers shouldn’t rush their purchasing decision while ignoring the trends in the market. It makes a ton of sense to wait for six months or more if mortgages are too pricey at the moment.
Failing to secure the mortgage on the first try
Administrative details are hugely important for a successful mortgage application, and young people typically enter the process without any experience when it comes to collecting the documentation. Incomplete paperwork will most certainly result in a denied application, burning valuable time and demoralizing the borrower. It’s possible to re-apply with the same or different lender, but there’s simply no reason to bungle the first attempt. Help from a mortgage broker could help you avoid the problems in the first place.
Confusing one mortgage type for another
There are a lot of different loan options available to Canadians, and each comes with a specific set of benefits and shortcomings. Needless to say, a person looking for a first-time mortgage in Guelph could easily overlook some key facts and end up with a lousy deal. It is imperative to conduct basic research and learn the fundamental rules of this market in advance of any final agreement.
Overburdening the family budget
Banks will happily allow you to commit more than 30% of your family income towards servicing the loan, but you need to think twice before accepting the maximum amount. The remaining figure will have to suffice for all ongoing, as well as unexpected expenses. Your future borrowing ability will also be severely affected by the mortgage, and it is reasonable to leave some room for possible emergency loans in the future.