Immigration has played an important role for the development of multiculturalism in Canada. Everyone who has come from foreign to settle down permanently in Canada needs a home to live in. Moreover the persistence of brain drainage from the developing world will continue to generate housing needs in Canada. Anyway, to live permanently, it is merely a waste of money spending on renting while it is possible to own a home with 5 percent and above equity of the purchase value. It is rarely possible for a person or family to own a home without mortgage. Moreover, the lowest interest rates at present also encourage the buyer to own a home.
Once we have opted to stay in Canada for the rest of the life, owning a home becomes helpful to maintain the stability. The first step to attain mortgage from Canadian Banks is to develop the credit history. When an account is opened with Canadian Banks or Credit Unions, these financial institutions issue Master Cards or Visa Cards to its clients. If we use these cards for grocery and routine expenses and make payments in time, it not only helps us to maintain a good credit history but also to utilize the funds used through visa without interest up to a certain time. It entirely depends on us how we utilize the Master or Visa Cards in our best use. It is our personal responsibility to make expenditure according to the financial means otherwise misusage of these cards may push us in debt with its high interest cost.
Whereas Canada is ahead in providing neat and clean life in a multicultural society, it also deserves praiseworthiness to maintain its economy on a leading path. If we look at a good prospective of tightening the mortgage rules in Canada, it hinders the borrowers to access those funds whose repayments may become out of reach for them. The barriers on insuring mortgages for second homes also result in expecting more equity of funds in the mortgaged property so that there should be a decrease in the defaults of the mortgage.
If the prospective home buyer contributes less than 20 percent towards down payment of the purchase price of the home, then the lenders insist on mortgage loan insurance for the full value of the loan. For example, if the prospective home buyer pays up to 5, 10 and 15 percent margin, then the premium on borrowed funds would amount to 3.60, 2.40 and 1.80 percent respectively which is an additional cost for the home buyer.
Now the question arises what type of home suits our affordability and requirements. No doubt, home prices are skyrocketing in Vancouver and surrounding cities, it is being really beyond the purchasing power of a common person. Though further rate cuts by Bank of Canada are a good sign but it is stimulating the housing market. It gives a boost to investors but a negative indicator for the needy to buy a house. While making such big expenses or investments, we should always keep in mind our own financial resources so that we can cut the coat accordingly. Apartments are the closest substitute to shift from basements for a small single family. Then depending upon the number of earning members in a family, salary package of individuals and cash-in-hand leads us to afford townhomes and independent houses. If home buyers have maintained a good credit history, then they can get mortgage loan insurance with only 5 percent down payment of the property purchase price. Moreover a good credit history in personal life also makes us eligible for moral support from the family, friends as well as our colleagues.
Harjit has Master’s degree in Agricultural Economics from the Punjab Agricultural University India and completed Mortgage Brokerage Course from the University of British Columbia. He has worked as Deputy Manager in Agricultural Development Bank Punjab India before migrating to Canada and is presently working in Canadian Banking industry for the last six years.