Posted: 1 Oct '18

How a Mortgage Broker Can Help Millennials Navigate the First Time Buyer Process

Despite mortgage rates still being at a historical low, many young home buyers struggle to get approved for financing. Below, we'll explore three of the most common challenges faced by millennials when purchasing their first home, and how a mortgage broker can help simplify the first-time home buying process.

No Credit History

Many millennials have adopted a "cash only" lifestyle to avoid consumer debt, but this reluctance to rely on credit cards can be more hurtful than helpful in the long run – particularly when it comes to purchasing a home. Lenders use a borrower's credit score and credit history as a benchmark in determining the borrower's ability to repay a mortgage. If the borrower doesn't have a credit history, they may not be able to secure the best mortgage rates, and may even be denied financing altogether.

If you're applying for a home loan but don't have a credit history, a mortgage broker can help you make your mortgage application as attractive as possible to lenders, regardless of what is – or isn't – on your credit report. If it won’t work immediately, a mortgage broker can also help you put a plan in improve your credit report, so you can get a mortgage in the future.

Limited Employment Record

To obtain a CMHC-insured mortgage, you'll be required to provide proof that you have been continuously employed for at least 2 years. This can be a challenge for first-time home buyers, who are often young and have sparse resumés. For those who are self-employed, getting approved for a home loan can be even more difficult. If you're self-employed or have been at your job for less than 2 years, a mortgage broker can help you gather other documentation to support your mortgage application, such as previous paystubs, investment statements and other information that will add strength to your mortgage application.

Shorter Mortgage Amortization

New mortgage rules were put into effect that shortened the maximum allowable mortgage term for Default Insured mortgages from 30 years to a 25 year maximum. This shortened amortization period translates to higher monthly mortgage payments, which means the same income amount will qualify for a smaller mortgage. A mortgage broker maintains professional relationships with many lenders and has access to different loan products that might work for you. An example is that some lenders will allow you to use Child Tax credit, or child support payments as part of your income. A mortgage broker will collect as much info as possible so that they can look at all options to qualify you for the mortgage that you want.

Whether you have a short credit history, a less than two years with the same employer, we can help you with your mortgage budget to purchase your first home.Contact a mortgage broker today to discuss your home ownership goals and mortgage financing options.

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