Capital Mortgages opened in January 1999 and has since serviced thousands of clients and arranged several billion dollars in mortgages in Ottawa area.

Which Factors Should I Consider Before Buying a Cottage?

With the warm weather in full swing and many pandemic restrictions still in place, an increasing number of Canadians are considering buying a cottage to spend their weekends relaxing in nature and away from the hustle and bustle of city life.

Before you take the plunge and decide to purchase one, there are a few factors to consider that differ from the process of buying your primary residence. 

Insurance

Because your summer (or all seasons) cottage is likely to sit empty for longer periods of time than your normal home and nobody will be there to do upkeep, expect to pay higher insurance costs. Cottages are also at a risk factor for weather-related damage, which is a factor in what you’ll pay.

Maintenance

At your primary residence, you’re home to mow the lawn, water the grass, and pay for snow removal. If anything goes wrong, you notice right away as you’re constantly there. However, your cottage will require seasonal maintenance which may be tricky if you live far away – you can either pay someone to do it, or factor in that you’ll have to make visits to do it yourself. And keep in mind that on those stormy winter days, you might have to shovel your way to your cottage’s front door!

Drinking water

We take our home’s drinking water for granted, but many cottages’ water supply isn’t safe to drink. The potential for water problems and contamination is higher in rural areas, so consider looking into what the cottage’s water quality is like before buying.

Weather-proofing

Being in Ottawa, we all know that winters can get frigid. Winterizing your cottage will come at a cost, given that you’ll have to think of plumbing, electrical, insulation and windows to withstand the cold.

Electricity charges

You’d be surprised at how expensive your cottage’s hydro bill can be! Depending on where it’s located, delivery fees can be very high in the countryside. Ask to see a previous bill from the cottage’s owner to get an idea of what to expect.

The septic system

This isn’t exactly the most fun element to think about, but we recommend always asking for proof of inspection of your cottage’s septic system, or paying for an inspection yourself before buying the property.

Do you have additional questions about what to look out for when deciding to purchase a cottage? Give us a call today at 613-228-3888.

 

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Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

Capacity, Credit & Collateral. What Every Lender Examines Before Approving Your Mortgage

Anyone who needs to refinance their home or buy a new one must be ready to learn about the requirements for qualifying for a mortgage. Once you learn the basics and you are qualified for the home loan, you will be in a position to land the best deal available on the market.

As you prepare to go out and get the best mortgage deal available, you should keep in mind that the mortgage lenders will consider some factors before they can lend you the money. These factors are broken down to three C’s, and they include the following;
1. Capacity

What is your financial stability concerning the loan repayment?

Your financial status and if you can be able to repay the specified mortgage. Salaries and wages, where you work for someone as an employee, tend to be more stable that other types of income. Due to the fact, that the salary is usually the same on a monthly basis.

Most of the self-employed are less likely to get a mortgage loan, compared to the employed. The reason for this is that self-employment deliver varied income from month to month. Also, the owner of the business {self-employed} will have to put all their effort to generate income.

Loan applicants will be required to file their income with pay stubs & tax returns. Conversely, the self-employed applicants will only be needed to file their income with the tax returns.
2. Credit

Can you repay your debts? What is your credit worthiness?

This C majorly focuses on your credit score. The mortgage lender will want to know your score before they can grant you the home loan. Expect the lender to ask for credit reports from the major bureaus, which are TransUnion, Experian, and Equifax. The lender will also need to know all the related payment histories, which will help to determine the creditworthiness further. Ideally, your credit score from all the major bureaus should be above 720. Any score under 620 is considered risky.
3. Collateral

What will secure the loan you are about to borrow?

Even with income from either of the two employments, the lender will still need a security for your home loan. Usually, the property that you are financing will act as the security or collateral for your loan. For that, your lender will need to know about the type, condition, quality, as well as the value of your property.

The mortgage lender will mostly be concerned with the property’s value. This helps them calculate the risk via the LTV {Loan-To-Value} ratio. This ratio is the percentage of the property value you intend to borrow.

If the LTV or the percentage is low, then the borrower is less risky concerning the mortgage loan. Conversely, higher Loan-To-Value percentages are considered riskier.

Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

How to Prepare to Finance a Home

10 Tips To Start Home Financing Right

1. Keep Your Job

You won’t need to stay in your current company for far too long to be able to take out a home loan. Just don’t make it seem you skip out every two years to prevent paying a higher interest.

2. Check Your Mortgage Options

Your best bet would be homes within the range of two or three times your gross annual income. Seek out help from a finance expert to see what type of loans you are qualified for. Make sure to gather the necessary documentation such as 2 to 4 month’s worth of bank statements, pay stub copies, etc. and don’t leave out other fees such as association, utility, maintenance, insurance fees and property taxes when computing the final figure.

3. Start Saving

You should have enough to cover a down payment and to qualify for a mortgage. 20% of total purchase cost is the ideal downpayment. Don’t forget closing costs, which can be somewhere around 2 to 7 percent of the total home price.

4. Look for Downpayment Options

As your mortgage broker to discuss downpayment plans offered by the government like the 1st Time Home Buyers Plan.

5. Get A Credit Report Copy

Get a current credit report and make sure to check for any errors about bad debts, late payments, and your credit history.

6. Establish a Good Credit History

This is a good time to build up your credit report by getting a credit card and making the payments on time. Do the same for your utility bills and pay it off as soon as you can.

7. Save Money for Downpayment

Commit to a certain amount of money to save for your down payment. The more down payment you can provide, the lower the interest rates for a mortgage. Aim for 20% of total home price.

8. Increase Your Income

Now is the time for greener pastures. Ask your boss for a raise, or look for a second job to get an income boost towards your dream home.

9. Plan A Budget

Use the last month’s receipts to get a picture of your spend habits. Take into account your food, utilities and rent and some other unexpected purchases. Then, cut out on some luxuries and put them instead towards your savings account.

10. Reduce Your Debt

Lenders typically check for a person’s debt load, which should be not more than around 36% of that person’s income. Debt load includes mortgages which should be at around 25-28% of total household net income. Cut your credit card revolving balances, student and car loans to an acceptable 8-10% of your net monthly income.