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Mortgage information

Before you start house hunting, establish how much money you need for a down payment and how much you can afford to carry in monthly mortgage payments. Be aware of hidden costs like inspections, appraisal fees, mortgage insurance, legal fees and title insurance.  

Most realtors will not show you homes unless you are pre-approved for a mortgage. 

 

PRE-APPROVAL MORTGAGES  

Obtaining a pre-approval mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home.  

 

Pre-Approval Mortage 

A detailed approach that can give you a firm decision on a home loan. It makes you a “cash buyer” in the seller’s eyes.  

Pre-approved buyers have increased bargaining power with the seller as they are perceived as serious buyers and bring to the table a certain level of credibility.  

Quick decisions can be made which is attractive to the seller especially in a multiple offer situation, potentially placing your offer to buy in a “first choice” position. 

 

Pre-Qualification 

Establishes how much you can afford to borrow, based on how much you earn and owe. Pre-qualification is not an assurance of mortgage approval. 

 

Ways to Obtain A Mortgage Pre-Approval  

Mortgage Broker 

Using a mortgage broker may be your best option. They can provide you with the most favourable mortgage available in the marketplace today with terms, conditions and interest rates to best suit your needs.  

Mortgage brokers are not limited to one lender or financial institution, they have access to all of them. 

Financial Institution 

Your lending options are limited with a financial institution. They can only offer you their product and interest rates based on their lending policies. 

COMMON TYPES OF MORTGAGES 

Conventional Mortgage 

  • Down Payment of 20% or more. No insurance premium. 

High Ratio Mortgage  

  • Down Payment between 5% and 20% 
  • Must have CMHC insurance for the Lender 
  • 0.5% to 3.75% of Mortgage amount (check for the most recent percentages with CMHC) 
  • $100,000 x 3.75% = $3,750.00 
  • Premium added to Mortgage 
  • 8% Sales Tax on premium to be paid up front 

 Open Mortgages 

  • More flexibility  
  • Interest rate is higher than closed mortgage 
  • Able to make extra payments on top of your regular payments  

Closed Mortgages   

  • Less flexibility  
  • Interest rate is lower than open mortgages  
  • Limits the amount of extra payments on top of your regular mortgage payments 
  • Expected penalties if you break your mortgage contract  

What You Need to Get Mortgage Approved

  • Notice of Assessment from a previous taxation year 
  • Letter from employer confirming annual income and length of employ 
  • T4 slips and/or income tax returns 
  • Verification of down payment- a copy of bonds, investment certificates, bank books 
  • A copy of the real estate listing of the property with an exterior photo. If the home is still to be built, the mortgage lender will need to see the architect’s or builder’s plans and details on lot size and location. 
  • A copy of the accepted offer to purchase or the building contract, if this document has been prepared. 

The MacDonald Property Group 

If you have any questions about mortgages and the pre-approval process, the MacDonald Property Group is here to help. We’ll answer all your questions and ensure your home buying experience is as easy as possible.  

Contact us today.  

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