How to Apply for a Mortgage – Requirements
What You Need to Apply for an Ontario Mortgage
When applying for an Ontario mortgage, you will need:
- A copy of the accepted Offer To Purchase and the land survey.
- A salary letter from your employer (self-employed buyers may require financial statements for the past three years as well as personal income tax returns).
- Confirmation that your down payment came from your own resources (e.g. bank statements or a gift letter).
- A list of all your assets and debts along with account numbers.
- A copy of the Real Estate Listing if buying an existing home.
- Condominium financial statements, if applicable.
- If you are buying a home to be constructed, bring a picture of the property, a copy of the building plans and specifications, the land survey, plus your agreement with the builder.
Your Ottawa 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 allows 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.
Once your Offer to Purchase is signed and accepted by the seller, your lawyer will order a series of searches from various municipal offices to ensure that the vendors haven’t been sued, that they’ve paid all of their property taxes and major utility bills, and that there are no outstanding mortgages or liens on the property once you become the owner.
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 co-ordinate and draft the appropriate documents. Your lawyer should disclose whether he/she is representing the lender as well. 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, because the lawyer pays the relevant parties on your behalf. Part of that amount covers the lawyer’s fee and disbursement costs. The lawyer obtains 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 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, and the survey, as well as a summary of the flow of funds. Be sure to keep these important records in a secure location.
It’s a sound idea to seriously consider some type of life insurance to ensure your mortgage can be covered in case of death. You have two options:
- Mortgage life insurance – Offered by the lender. 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. Quotes are included with each approved mortgage.
- Personal life insurance – Offered by a life insurance broker or agent. Generally, the cost is low as well and there are benefits including the life insurance payout is the same regardless of what your remaining mortgage balance is. Quotes can be obtained by contacting Brendon Laing from Freedom 55 Financial.
Read about the differences between mortgage life insurance and personal life insurance here.
Financial institutions vary in their prepayment privileges, which let you pay down your mortgage faster. Your Windsor Mortgage Centre specialist can discuss your prepayment options with you, based on the mortgage you select. Also 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 5 to 25 years.
Weekly or biweekly instead of monthly payments could shave a considerable amount on 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!