Let’s say you’re considering buying a home or refinancing your mortgage. While the idea of owning property or optimizing your finances can be exciting, navigating the mortgage landscape often feels overwhelming. However, mortgage myths can restrict you from making well-informed decisions. That’s why understanding the facts is crucial.
Here is a guide by Pradip Maheshvari Mortgages to clear up the most common misconceptions about mortgages in Canada and empower you to take confident steps toward your financial goals.
Five Most Common Myths About Mortgages in Canada: Truth Revealed!
Myth #1: You Need a 20% Down Payment to Buy a Home
It’s a widely held belief that a 20% down payment is mandatory to secure a mortgage. This misconception has caused many Canadians to delay their dream of homeownership, believing they need years of savings.
The Truth About Down Payments:
While putting down 20% helps you avoid mortgage insurance, you can purchase a home with as little as 5% down for homes under $500,000.
Moreover, programs like the First-Time Home Buyer Incentive and access to high-ratio mortgages make it easier for buyers with smaller savings to enter the market.
Example: If you’re buying a $400,000 home, a 5% down payment means you only need $20,000 instead of $80,000.
Myth #2: Mortgage Pre-Approvals Guarantee a Loan
Many assume that once pre-approved for a mortgage, they’re locked into receiving the funds. This can lead to disappointment during the home-buying process.
The Truth About Pre-Approvals:
A pre-approved mortgage in Canada is an estimate of how much you might qualify for—not a guarantee. Factors like changes in income, credit score, or increased debt before closing can affect the final approval. To avoid surprises, maintain financial stability and consult your mortgage advisor throughout the process.
Read More In Our Guide:
Mortgage Pre-Approval for First-Time Buyers in Canada
Myth #3: Variable Mortgages Are Always Risky
The idea of fluctuating payments often scares borrowers away from variable mortgages. But is this risk truly as significant as it seems?
The Truth About Variable Mortgages:
Variable-rate mortgages can offer long-term savings, especially in low-interest-rate environments. Historical data shows that variable rates have often outperformed fixed rates over time.
Plus, many lenders allow you to switch to a fixed rate without penalties if market conditions change.
Myth #4: It’s Always Better to Go with Your Bank for a Mortgage
Many Canadians believe their primary bank offers the best mortgage rates and terms because of existing relationships.
The Truth About Mortgage Brokers:
Mortgage brokers like Pradip Maheshvari provide access to a network of lenders, including major banks, credit unions, and alternative lenders. This ensures you get customized solutions and potentially better rates than what your bank offers.
You Might Also Like:
Mortgage Broker vs. Bank: Key Differences Explained!
Myth #5: Paying Off Your Mortgage Early Isn’t Worth It
Some homeowners believe there’s little benefit to accelerating mortgage payments or making lump-sum contributions.
The Truth About Early Payments:
Making extra payments can significantly reduce your overall interest costs and help you become mortgage-free sooner. Many lenders offer prepayment privileges, allowing you to pay up to 15-20% of the principal annually without penalties.
Pro Tip: Use a mortgage calculator to see how even small extra payments can make a big impact.
Choose Pradip Maheshvari Mortgages for Tailored Guidance in Canada:
The mortgage world is full of myths, but knowing the truth can save you time, money, and stress. At Pradip Maheshvari Mortgages, we specialize in helping Canadians debunk these myths and find the perfect mortgage tailored to their needs.
Get In Touch Now! & Take the first step toward your dream home or financial goals.
No comment yet, add your voice below!