Q & A
Q: Can I purchase a home if I have credit card and car loan debts?
A: Yes, you can still buy a home in Canada even with credit card debt, but it’ll affect how much you can borrow and whether you qualify for a mortgage. Lenders don’t care about the debt itself—they care about how it impacts your ability to pay them back
Q: Why does my credit score matter?
A: Lenders use your score (from Equifax or TransUnion, typically 300-900) to gauge risk. Higher scores mean lower interest rates:
760-900: Prime rates (e.g., 4.5% on a 5-year fixed today).
680-759: Still decent, maybe 0.25% higher.
600-679: Subprime territory—rates climb, and approval hinges on debt ratios.
Below 600: Tough sledding unless you’ve got a big down payment or alternative lender.
“If people like you, they will listen to you. but if they trust you, they will do business with you”
-Zig Ziglar
My mortgage process
The mortgage process can feel like a bit of a journey, but it’s pretty straightforward once you break it down. Here’s how it generally works:
First, you’ll want to figure out what you can afford. This usually starts with getting pre-approved. I’ll look at your income, credit score, debts, and down payment to give you a ballpark figure. The minimum down payment is 5% for homes up to $500,000, but it scales up if the price is higher (e.g., 10% on the portion between $500,000 and $1 million, and 20% for anything over $1 million if it’s not insured).
Next, you shop for a home within that budget. Once you find “the one,” you make an offer, usually with a real estate agent’s help. If the seller accepts, you’ll need to secure your actual mortgage. This is where I finalize things with the lender. I’ll need details about the property. You might also need a home appraisal to confirm the property’s value matches the loan.
A big piece of the puzzle is mortgage insurance if your down payment is less than 20%. In Canada, this is mandatory for “high-ratio” mortgages and typically comes from the Canada Mortgage and Housing Corporation (CMHC) or a private insurer like Sagen or Canada Guaranty. It protects the lender if you default, and the cost (a premium) gets rolled into your mortgage payments.
I will provide you with a chart showing you different payment options and will explain them in detail so you can make an educated decision on which best suits your needs and future plans. You’ll also choose your mortgage type—fixed-rate (stable interest) or variable-rate (fluctuates with the market)—and the term, often 5 years, though it can range from 6 months to 10 years. The amortization period (how long it takes to pay off the full loan) is usually 25 years but can go up to 30 in some cases.
Before closing, a lawyer or notary gets involved to handle the legal stuff—title transfer, land registration, and making sure the lender’s mortgage is secured. You’ll need to cover closing costs too, like legal fees, property taxes, and maybe a home inspection (highly recommended).
Payments start after that, usually monthly, and include principal, interest, and property taxes if you’ve bundled them into the mortgage. One quirk in Canada: stress tests. Even if rates are low, lenders test your ability to pay at a higher rate (currently around 5.25% or your contract rate plus 2%, whichever’s higher) to ensure you can handle potential hikes.