Real Estate

Mortgage

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  • Mar 26th, 2017 11:27 pm
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Jr. Member
Feb 6, 2014
115 posts
1 upvote
Beaverton, ON

Mortgage

Hello all, I'm wondering...is it easier to qualify for a mortgage on a home that is already owned free and clear VS qualifying for a mortgage on a new purchase? TIA
2 replies
Jr. Member
Jun 24, 2011
158 posts
60 upvotes
West Lafayette, Indi…
It's easier to take out a HELOC but you pay higher interest rate. The reason is lenders feel more secure when you're putting money into paying down a house, then blowing it out on luxury goods.
Deal Guru
User avatar
Feb 2, 2014
11231 posts
3350 upvotes
Toronto
Realister wrote: Hello all, I'm wondering...is it easier to qualify for a mortgage on a home that is already owned free and clear VS qualifying for a mortgage on a new purchase? TIA
It's harder. Lenders are cautious about borrowers leveraging the equity in their homes. They scrutinize a refinance at 80% LTV much more than a purchase at 80% LTV.

Refinances also have:

-higher rates (thanks to the November 2016 changes)
-lower LTVs (max LTV is 80%..purchases can go up to 95% LTV)
-maximum take out amounts (monline lenders typically cap equity take outs to $200k)
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative

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