Buying a home without obtaining a mortgage may be difficult for quite a lot of people, especially considering how unsecure lending institutions have become. But before you submit your applications, you should consider the following points.

• Budget

You must be aware of your financial position, and must know your budget. You should then search for houses that fall within this range. Also, analyze your monthly income and expenses for each month, so that you know how much money you can keep aside for your monthly payments. In any case, the total of your debt payments (including the mortgage and any other loans you have taken) should not be more than 40% of your income.

• Area

Decide the location of your new home and search for houses in that particular area only. Remember that prices vary with area. A house in small town will probably be in your budget, but a house in a more urban city may be too expensive for you to afford.

• Credit Report

Examine your credit report and make sure it does not have any discrepancies. The mortgage lender will review this report to determine your credibility, and will use it to determine if your application should be approved or not. The credit core also influences the rate which you will be offered.

• Down Payment

You must have probably been saving money aside for the down payment. Try to save enough so that the down payment is more than 20% of the property’s value. For down payments less than 20%, it is mandatory to buy CMHC insurance. If your savings are less than this, you could either wait some more before making a purchase or you could search for a house with a lower selling price.

• Home Buyers Plan

See if you qualify for the Home Buyers Plan (HBP) or not. This program will allow you to draw money from your Registered Retirement Savings Plans or RRSPs. The maximum limit is $25,000 per person.

• Mortgage Rate

Analyze which mortgage rate is more suitable for you: the fixed rate or the variable one. A fixed rate is characterized by the same monthly payments for the whole term, and a variable rate means the monthly rates will vary. If random budget changes are not a problem for you, go for the latter option because it is slightly cheaper. Also make sure to compare rates offered by different lenders.