If you are thinking of getting 100% financing for a new home, better be prepared for the news. The Canadian finance people in the government will no longer back 100% financing. But wait, this is about a government mortgage issue, not an issue with private mortgage companies. You can still get this option from a trusted local lender.

What is One Hundred Percent Financing?

When you apply for a mortgage and have no money for a down payment or a partial payment for the mortgage, you get 100% financing to resolve the issue. This option provides more people from low income brackets the flexible option to own homes.

But here’s what you should know – this financing scheme simply means that you get 80% of the loan amount you want to borrow for your new home. The other 20% is another loan or a piggyback loan to cover the down payment for the home. Why is this 20% important? If you don’t put up this amount, you have to deal with the required insurance fees that unfortunately increase the mortgage amount. Translate this to higher monthly payments.

This is not a Ponzi scheme. This is a strategy to go around the insurance fees. With 20% on the second loan and another 80% from the same lender, you get your 100% financing. The 20% goes to the Private Mortgage Insurance (PMI) and the amount will depend on the amount of the mortgage loan.

The equation is simple, the bigger your loan the higher the PMI. The amount is carried throughout the loan life or until you have built enough equity on your home or if you have been prompts with your payments. What if you have a bad credit history? This should not be a problem. You can still get 100% financing and fulfill your dream of owning dream house.

How to Get Full Financing

Take a look at what lenders have to offer and compare their rates. Excited would-be homeowners often make the mistake of settling on a lender without checking out the mortgage market. You should take the time to shop for lenders and verify their track record before making any inquiries.

Be choosy with your top three choices; if you make inquiries with several lenders, chances are your credit record will be dug up and this can hurt your credit rating. So choose the lenders with the best offers before you ask around for their take on 100% financing.

Don’t make the mistake of bloating your income just to get a lender’s approval – even if this is true. Lenders will allow a maximum amount higher income but then, this can be a problem later on if you can’t meet your monthly obligations regularly.

Instead of owning your dream house, you are going to own a nightmare of a mortgage. Approach your chosen lenders and ask for their quotes, policies on early payment, fees, and other charges. Knowing what the transaction will involve will help you make a sound choice.

Don’t Settle for High Interest Rates

People saddled with poor credit rating believe that it is their lot to accept higher interest rates. This should not be the case. If you have a poor credit rating, you have the right to choose a lender who offers lower interest rates. If the lender cannot lower his rate, then take your business elsewhere. Even if you are not happy or proud with your credit rating, there are reasonable lenders who will give you a chance to own your home through 100% financing at reasonable rates.

Allegro Mortgages Corp. – Best Broker for All Your Financing Requirements
(416) 987-0008

Author Bio: For your 100% financing needs, check out what refinancing Toronto companies like refinancing Maple has to offer. Visit AMortgages.ca today.

Category: Advice
Keywords: 100% financing