For generations, the standard path to homeownership has been the same. It starts with getting a bachelor’s degree, paying off student loans, putting money down for retirement, and buying a house.
Most Canadians now choose house ownership before debt relief or even retirement, according to a recent poll. In the wake of this, a growing number of Canadians are looking to enter the property market.
Here’s one thought that would have crossed your mind several times. “What about my student loan payments?” Is it possible to receive a home loan if you have student loan debt? In terms of mortgage approval in Canada, is it an issue?
Mortgages and Student Loans
Regarding home affordability, student loan debt is the most significant factor in determining how much you may borrow. If you can afford a smaller monthly payment, you can afford a more costly property.
Loan-to-value ratios determine mortgage approval in Canada. These ratios include your income, debt, and living expenses.
The gross debt service ratio, which is not influenced by student loans, is the first criterion for affordability. The second rule is the overall debt service ratio. Calculations cover everything from mortgage interest to property taxes to heating costs. This ratio will be affected by student loans since they involve debt.
Mortgage Availability And Credit
Your student loan debt immediately affects your home buying power, but it also affects your credit score, making it harder to secure a mortgage. Your credit score will improve if you continuously pay off your student debts.
Unpaid student debts and late payments will negatively impact your credit score. Poor credit scores make mortgage lenders wary about accepting applications.
How to Get a Mortgage With Student Debt?
While student debt might hinder your ability to get a pre-approved mortgage in Canada, it is not impossible to do if you want to get a mortgage with school debt.
Pay off other debts: Paying off other obligations, especially small credit card bills, can decrease your overall debt service ratio and enhance your mortgage affordability. Your chances of getting into college will improve if you make on-time payments on your student loans.
Whether you’re unclear if you’ll be able to secure a mortgage with student debts, you can be pre-approved.
A pre-approved mortgage in Canada needs good credit and no debt, as well as a substantial down payment if you want to get one.
You may find yourself applying for a mortgage while still in debt if, as is often the case, life does not go as planned. Students with student loan debt may get a mortgage, and their home affordability shouldn’t be adversely affected by their student loan debt.
With over a decade of experience in pre-approved mortgages, Money PRos offers the lowest mortgage rates for first-time home buyers in Canada.
Email us at moneypros24@gmail.com today and we’ll get you pre-approved in just 24 hours (conditions apply)!
