20 Aug Tips To Apply A Mortgage To Buy a Pre-construction Home

When applying a mortgage for a pre-construction home, you have several options to consider, including a fixed- or variable-rate mortgage. Comparing the benefits and drawbacks of fixed-rate versus variable-rate mortgages can be challenging since future interest rates are unpredictable.

Fixed-rate mortgages provide consistent monthly payments, but you may find yourself locked into a high rate for only a year or two before it drops. Variable-rate mortgages, on the other hand, may save you money, but you must accept some risk owing to the unpredictable nature of interest rate changes.

Other thing to consider is what type of construction loan you need to apply or which one can provide you the most benefits. Construction loans are of following types:

• Completion Mortgage: A completion mortgage does not force the borrower to repay their loan until the construction of their property is completed.
• Draw Mortgage: A draw mortgage allows the borrower to access portions of the loan amount in stages throughout the building process.

If you are confused about which financing alternatives are available to you, you should get a mortgage pre-approval before beginning your pre-construction home search. A pre-approval letter from a lender indicates your purchasing power and improves your offer, as well as notifying you of how much mortgage you can afford.

Once you’ve decided to obtain a pre-construction mortgage, there are a few steps you can consider implementing for easy mortgage approval:

• Good Credit Score: Your credit score is one of the first things a lender will look at when you apply for a mortgage. Prioritize keeping a healthy credit score in preparation for your mortgage application by incurring small amounts of debt and paying it off quickly. This will eventually allow you to qualify for better mortgage terms and interest rates.
• Save for a Down Payment: If you want to satisfy the deposit requirements for your pre-construction property, you should start saving for a down payment early. A higher down payment also results in a smaller loan, lowering your long-term interest expenses.
• Review Mortgage & Purchase Terms: After you’ve decided on a home, thoroughly review the terms and conditions of the purchase agreement, including the deposit structure, cancellation rules, and recourse alternatives in the event of delays or unanticipated events.
• Prepare for additional costs: When budgeting for a pre-construction home purchase, remember to include additional costs like closing fees, land transfer taxes, and condo maintenance fees. Purchasing a home takes a significant toll on your money, so it is critical to leave some buffer area in your budget to avoid financial difficulty down the road.

Conclusion

When it comes to applying and securing a construction mortgage in Abbotsford, professional guidance of an experience mortgage broker can be of great help. Satbir Bhullar is your first-choice mortgage broker providing one of the best mortgage products at the lowest interest rate possible to help you fulfill your dream of buying a property you can call yours. For more details, contact our Abbotsford mortgage broker today.