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Large Loans (Jumbo loans)
December 21, 2021 | Posted by: Sergo Rica
Large Loans (Jumbo Loans
What is a large loan or also called a jumbo loan? Any mortgage that is a million dollars and above is considered a large loan due to the size.
How does this effect your mortgage approval? Depending on the value, some lenders may not lend up to a specific amount required to close a transaction. Therefore, reaching out to a mortgage broker will give you access to all of the lenders that will lend on that amount. There are a lot of lenders that specialize in these sorts of loans, and they offer very competitive rates. Reach out to find out what the best current rates are!
How does a jumbo loan differ from a regular loan? With any loan (purchase price) under one million dollars, a buyer can put as little as 5% down payment when purchasing. However, when purchasing a home that is over the one-million-dollar value the minimum down payment is 20%, even if you are a first time home buyer. Please refer to the First Time Home Buyer blog to see the different between a regular buyer and a First Time Home Buyer
When it comes to refinancing a jumbo loan, the process is pretty standard and with values going up in the market, the mortgage sizes are starting to increase, and lenders/banks have no problems with such loans as they are becoming the new norm. The only thing to keep in mind when refinancing a jumbo loan is the sliding scale.
What is a sliding scale? A sliding scale is how a lender sees larger loans outside of the GTA or in smaller cities/towns. Where a homeowner might be able to borrow up to 80% of a 5-million-dollar property in Toronto, in a smaller town or city, such as Windsor, Barrie, Orangeville, that same person might be able to borrow up to 75% of the property value. The reason for this is marketability factor in the eye of the bank. Not to say that the home will not sell, but it might take a little longer to sell in a regular market, therefore, they scale the loan based on the property location.
Larger loans have a few more moving parts than a regular loan, but they operate the same way. The best way to explore all of these options is to reach out to a mortgage broker and go over the full process, pricing, LTV (loan to value), etc.
Feel free to contact us for any questions:
Sergo Rica
647-965-7422
sergo@sercafinancial.ca
