When applying for a mortgage, you will need:
- A copy of the accepted Offer To Purchase
- An income letter from your employer stating length of employment, position, and annual income. If you are paid hourly, the rate and guaranteed hours are required on the letter.
- Self-Employed individuals will need the most recent two years of full T1 General forms and Income Tax Assessments. If you have a limited business, then two years of business statements and Articles of Incorporation confirming ownership and shares owned are recommended. If you do not have two years of documentation, please contact one of our mortgage experts.
- Confirmation that your down payment came from your own resources:
- If you used savings from your bank, then a copy of three months of accumulated savings confirming your name, account number, and all entries is required. If there is a lump sum deposit, written verification of the source will be required.
- Gift from Parents: You will need a completed Lender’s Gift Letter and confirmation of deposit into your bank account prior to funding. The Gift Letter will be provided to you after a mortgage commitment from the lender has been received. In some cases, the lender may ask to see the source of the Gift (parents home equity line, savings account, etc.).
- A list of all your assets and debts.
- A copy of the realtor’s MLS listing of the existing home (ask your realtor for this as it differs from the one found online).
- Condominium financial statements, if applicable (you will need to give this to your lawyer as it will be a condition in an offer for your lawyer to review).
- If you are buying a home that will be constructed, bring a picture of the property, a copy of the building plans and specifications, the land survey, and your agreement with the builder.
Your Mortgage Centre specialist can help you determine how much you can afford, obtain a pre-qualified approval, and select the mortgage that’s right for you. This will allow you to act quickly when you find the home you want. After your real estate agent draws up an Offer To Purchase between you and the vendor, contact your mortgage broker —your deal is almost complete!
Before You Sign The Offer
Select a lawyer as you’d select a real estate agent: seek competitive fees, excellent service, knowledge, and approachability — in other words, value. Your lawyer should also disclose whether they are representing the lender.
Involve your lawyer before you sign the offer, which will become a legal Agreement of Purchase and Sale once you and the seller sign it. Have your lawyer read the document carefully and review it with you. Once it’s signed and accepted, your lawyer will order a series of searches from various municipal offices to ensure that the vendors haven’t been sued, that all of their property taxes and major utility bills have been paid, and that there are no outstanding mortgages or liens on the property.
Your lawyer will also draft a series of closing documents and review the closing documents drafted by the vendor’s lawyer.
Your lender and lawyer will coordinate and draft the appropriate documents. Your lawyer will notify the property tax offices, as well as the utility offices, that you will be the new owner as of the closing day.
A few days before closing, you’ll visit your lawyer’s office to sign the closing documents. Bring a certified cheque for the balance of the closing funds. Part of that amount will cover the lawyer’s fee and disbursement costs. The lawyer will obtain the mortgage funds directly from the lender funding your mortgage.
On Closing Day
Your lawyer will close the transaction with the vendor’s lawyer. At this time, the balance of the purchase price will be exchanged for the keys to your home and closing documents will be exchanged. Your lawyer will register the deed, or title transfer, and the mortgage. Finally, you can pick up the keys to your new home!
After closing, your lawyer will send you a reporting letter and copies of all the documents you signed including the deed, the mortgage, the survey, and a summary of the flow of funds. Be sure to keep these important records in a secure location.
Mortgage Life Insurance
It’s a sound idea to seriously consider mortgage life insurance. Generally, the cost is low and can be incorporated into your mortgage payments. In the event of death, terminal illness, or permanent disability, your balance will be paid in full. Details vary among financial institutions, so it’s a good idea to read the policy carefully. Quotes are available with each approved mortgage.
Financial institutions vary in their prepayment privileges, which let you pay down your mortgage faster. Your Mortgage Centre specialist can discuss your prepayment options with you, based on the mortgage you select. Be aware that the longer the amortization period (the time it takes to pay off a mortgage), the more interest you’ll end up paying. Amortization periods usually range from five to 25 years.
Instead of paying monthly, weekly or biweekly payments can shave a considerable amount off of your overall mortgage interest payments, depending on current interest rates.
Another option to consider is portability, which may help to ensure that you have financing if you sell your original home and purchase a new one. You may also wish to consider whether, if you sell your home, your mortgage may be assumed by the buyer. This can be a major advantage if your mortgage rate is below current market rates.
Your house is like a savings account — start making convenient withdrawals!