Buying a home in Canada comes with plenty of financial challenges, both in terms of affordability and in finding the best financing that will help to make home ownership a reality — a reality that seems to be shrinking for many families in Canada.
Despite the recent slowdown in Canada’s housing market, owning a home is becoming less attainable. Data show that only Canada’s top 25% earners can afford to own property in big cities like Vancouver or Toronto, where home prices average $1,156,050 and $806,755, respectively.
With sizeable down payments, mortgage insurance, and the implementation of mortgage stress testing, borrowing guidelines are stricter than ever and costs continue to climb.
For those who remain hopeful that they can one day achieve their home buying dreams, it’s important to thoroughly explore your financing options. Not all mortgages are the same and comparing lenders may help you find one that allows you to overcome some of the costly complexities of buying a home.
Traditional Banks & Lenders
Most home buyers begin their financing journey with a traditional bank or lender, since most of us do some form of banking already. Banks can be hit or miss as far as interest rates and may require a great deal of negotiation to secure a good rate. To give yourself the best advantage, it’s important to maintain a high credit score, reduce discretionary spending, and save up for a large down payment.
Mortgage brokers act as middlemen in the mortgage transaction. Rather than actually lending money, they broker deals with other lenders and take a small commission as a result. Brokers have major buying power with banks and other lenders, which gives you access to potentially better rates. These rates are often lower than what banks advertise, and brokers usually do all the legwork in comparing mortgage products to find you the best rate.
If you’ve been rejected by traditional lenders, a private lender could help you get your foot in the door. Requirements are typically less stringent, which makes them an attractive alternative to banks.
However, the tradeoff is that many private lenders will charge much higher interest rates, since most applicants tend to carry more risk (this is often why traditional lenders will reject their applications in the first place). It’s not uncommon to see interest rates reach 15% or more in a private lending situation.
Home buyers who aren’t satisfied with any of the typical mortgage options and want their hard-earned savings to go further, now have another choice: FirstStep. We developed our company to cater to the growing need of Canadian home buyers who are struggling with affordability due to the high prices and strict government regulations.
We’ve completely rethought the approach to getting a mortgage, including a down payment of just 10% and monthly savings of up to 25%, so that you can buy a home now rather than scrimping and saving for years.
Take the First Step — contact us today to learn more about our affordable financing options and walk a better path to home ownership.