How To Apply for A Mortgage When Moving Out of Your Parents Home

Whether you’ve just turned 21 and are desperate for some independence, or have been living at home with your parents for many years, and feel now is the time to go it alone, applying for a mortgage can seem like a major, somewhat scary step to take. However, with help from a mortgage broker and the following their financial guidance, you should be able to secure a mortgage with minimal fuss.

Basic guidance when applying for your first mortgage

You might want to know exactly what a lender is looking for when you first apply for a mortgage, and these are the most common factors they’ll take into account:

  • Your income 
  • Credit score
  • Debt history
  • Debt ratios

The better position you’re in financially, the less chance there is of a lender viewing you as a risk, and the less of a risk you are, the better the chance of your mortgage application being approved. 

It’s not necessary to take out the biggest loan you qualify for, in fact, it can be much more sensible to select a property that you can easily manage to pay for in monthly mortgage instalments, and this also makes you more likely to qualify for lower interest rates. 

What are the most important aspects of a mortgage?

Consider each of these factors carefully, and ideally, talk them over with a local mortgage broker before making any financial decisions:

Down payment: down payments can be as low as 5%, but all properties worth more than $1 million will require a mandatory down payment of 20%. 

Mortgage default insurance: you’ll have to buy mortgage default insurance if your down payment totals less than 20% of your overall purchase price; protecting lenders from risk, bit costing you more in the long term. 

First-time buyers incentive: offered by the Canadian government, they provide first-time buyers with 5% of the cost of an existing property between 5% and 10% of the cost of a newly constructed property under this programme. 

Mortgage rates: you’ll likely need to choose between fixed and variable rates when negotiating the terms of your mortgage, and as with any of the options mentioned here, a mortgage broker is best placed to help talk you through them and find you a great deal with a reliable lender. 

Closing costs: closing costs can include new home buyer fees, insurance, new home prepayments and property taxes to name but a few.

Pre-approval: a local mortgage broker can help you get a mortgage pre-approval, which will help determine which lenders and products you qualify for.

Going it alone and buying your first home is something of an adventure, but many find it to be a daunting prospect, too. To eliminate as much worry as possible, and make the whole process simple and stress-free, work with a local mortgage broker who will do their best to get you a great deal on a mortgage, for a property you can comfortably afford.