Getting a Mortgage in Calgary - Reich Law Office
You can shop all day for a home in Calgary, easily one of the nicest places in Canada to live, but finding the right home is only half of the battle. You still have to qualify for and arrange a mortgage in order to actually pay for the property and the benefit of living there. There are a number of factors that go into getting approved for a mortgage, but for our purposes here, we will concentrate on the numbers and ratios commonly used and accepted by most in the Canadian mortgage industry.
Remember that unless you are independently wealthy, a mortgage is going to be a must for anyone wishing to own their own home or business. In many cases people go ahead and get pre-approved for a given amount, as this allows them to know what they can and cannot afford, and gear their property hunting wisely. This eliminates unreasonable expectations as well as cutting down on the disappointment of falling in love with a property that you have no hope of affording.
How it works
The initials you need to remember most are GDS (Gross Service Debt Ratio) and TDS (Total Debt Service Ratio). The GDS measures the amount of your income that will go towards paying home related debts, and the TDS measures what monies go towards your total debt. If you want the loan insured by CMHC or GE Capital, the GDS cannot be over 32% and the TDS cutoff is 40%.
GDS may be calculated by adding the monthly mortgage payment, monthly property taxes, 50% of maintenance fees, arriving at a subtotal that, when divided into your gross monthly income, determines the GDS.
Your monthly mortgage payment is arrived at by looking at the amount to be borrowed, the interest rate, and how long the mortgage will be amortized. Annual property taxes can be divided by 12 to arrive at the monthly amount, and heating may be figured in at the rate of $50 per month.
The TDS ration examines the details in the GDS ration, and then goes a step further by adding in the other monthly debt obligations that you may have incurred, such as car loans, credit account balances, credit cards. It does not, however, take into account amounts such as those found in phone bills or car insurance.
Mortgage lenders also look at other factors with regard to individual applicants, such as job stability, credit rating, etc, while negative credit scores or recent job hires may not rank very high on the credit scales. With the mortgage market becoming increasingly competitive, lenders are working harder to earn your business. If your credit rating is stellar and you have at least 20% down payment in hand, you may be less likely to be asked to prove your income. Even if your income is wanting, a higher down payment may still get you through the approval door.
How Reich Law Office can help
Your real estate agent can help you through the steps necessary to secure the proper paperwork for your mortgage, and an experienced real estate attorney will be able to draft final paperwork and oversee the entire closing process, making sure all the major (and minor) details are properly accounted for and addressed.
The law offices of Jim Reich are proud to serve the Calgary area with quality, courteous service.
Contact Reich Law Office today at (866) 529-7224.
How We Can Help
- Buying Real Estate in Calgary
- Getting a Mortgage in Calgary
- Refinancing Your Mortgage in Calgary
- Selling Real Estate in Calgary
Thanks! Your message has been sent.
Reich Law Office
212 Market Mall Professional Centre
4935 - 40 Ave NW