How to get approved for a mortgage with student loans

Welcome to Homebuyer's School, brought to you by Brookfield Residential Hi everyone and welcome to another edition of Homebuyer's School

Today I'm joined by Mujtaba Syed, a mobile mortgage specialist with TD Canada Trust and today the question we're gonna answer is: How to get pre-approved for a mortgage with a student loan or any other financial debt Yeah absolutely, so your current financial obligations definitely plays a role in your pre-approval Any debts outstanding, it could be a student loan, it could be a car loan, it could be many other things So our pre-approval will actually help you kind of get an idea We'll break down what your payments are and we'll actually help you decide what's the perfect home for you, if you're comfortable with all your payments and the mortgage payment, that's the best place to be

You should be able to kind of cover your current financial obligations and also the mortgage It also might even help you to kind of decide, "should I pay off those loans first, should I pay off my student loans or my car loan so I can get approved for a for, a larger mortgage to get you into the perfect dream home" Once again, these are just great question to have with your specialist It's all about having that discussion and it should be open-ended to kind of have that discussion and see exactly where you see yourself to be It should be a long-term goal, it should be a long-term plan and really have that discussion with your specialist and lender

How much do financial debts really impact the ability to get pre-approved for a mortgage? Yeah absolutely, that's, like I said, it's it's a very, very important part It could have a major impact on your pre-approval depending on the debts that you currently have, your repayment history with that debt and many other things So it's, it's a very important step to kind of get an idea of your financial obligations and should also factor into your own monthly budget that you've kind of worked out for yourself after or before you've seen that specialist, just find out exactly how much you want to spend on your mortgage or on your home so you can actually stay on top of your financial obligations So I've heard a lot about this, an insured mortgage Is it a different process – first of all, what is it right? What is an insured mortgage and is it a different process in terms of getting a pre-approval for it and why would I want to get pre-approved for that? Absolutely, so the process should still be the same

Insured mortgage is technically just what we call default insurance on a mortgage So in Canada it's actually – it's a legal obligation if you're putting less than 20 percent down to have default insurance, which is just – it just makes the bank's more comfortable in lending to you So without the default insurance you need to come up with 20 percent down to buy a house which sometimes could be a large amount It could – it could actually take you a very long time to save up that, but with default insurance it's a benefit to some clients and to buyers It gets you into market sooner with the minimum of 5% down and get you out owning a home sooner

Does that, does that default insurance or insured mortgage – does that, is a part of your monthly payment plan or do you have to put it up front? Yeah absolutely, it could be done either way We could definitely build it right into your mortgage so it's not you part of your payments or you could pay it up front A lender will definitely ask you those questions and say what meets your needs the best If it's – if you feel like you rather just pay for all at once and through your mortgage payment, they can definitely add it or if you feel like you rather just pay it upfront, you can definitely do it that as well Do you have a choice? So let's say I want to get pre-approved and I don't have my 20% right and I'll have you know generally good credit score and you know, I meet all the criteria for the – let's say; the bank or mortgage specialist

Can I say, "Hey, I want to choose a insured mortgage versus – or it's only for special cases? Yeah so technically if you have less than 20% down, it's the only way to technically purchase a house is get that insured mortgage Once again, it is a benefit Look at it as a benefit so default insurance and it gets you into a home sooner and with that 5% sometimes you need to sit down and talk and say, "I could, I could save that 20%" but saving that 20% keeps you up from getting into the market sooner where you've technically missed out You might have missed out any appreciation in the market

How many more years of rent you might have had to pay to save up that Sometimes, it doesn't make sense to save that 20% and get in sooner Once again, it's a conversation to have with your specialist and your lender to see what best fits your needs If you want to get in sooner or you can rather wait and get in later It just depends on your financial situation

Do you have anything else to add in terms of insured mortgage or mortgages with financial debts? Yeah absolutely, so there's a lot of benefits in getting an insured mortgage and you can actually go on their websites One of the insurance providers in Canada is called CMHC which is called the Canadian Mortgage Housing Corporation They're very, have a very detailed benefit on their website It also gives you a lot of helpful tips on their website about getting a home and buying a home The other one's called Genworth Insurance and the other one is called Canada Guaranty and they all provide very similar things, they might have little different things here and there but it's also a benefit because there are certain guidelines that they can help you with

If you're going through a hardship, most insurance companies have things built into their insured mortgages where they can actually help you They can help you with your financial obligation, they can work with you, they can do other things, so they can actually be very helpful to have Perfect, well thank you very much Mo Thank you very much everyone for joining us and we'll catch you next time That's another edition of Homebuyer's School

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