For many first-time buyers, the process of finding a home can be confusing. Here, we’ll demonstrate how to purchase a home – and how we can help along the way.

When shopping for a home, the first step is to figure out how much you can afford. A pre-approval will give you the confidence of knowing that financing is available, and it can put you in a very positive negotiating position against other home buyers who aren’t pre-approved.

In order to get pre-approved for a first-time mortgage, we require information that will determine your buying power. Affordability is based on the household income of the applicants, the monthly expenses, (car loans, etc.) and the expenses associated with owning a home (property taxes, condo fees, and heating costs). You also need to determine if you have enough cash resources to secure a mortgage to buy a house. The cash required is for the down payment. In Canada, a minimum of 5%* of the purchase price is usually required.  In addition, there are closing costs which equates to 1.5% of the purchase price. Closing costs include amounts such as legal fees and land transfer tax that must be incurred to complete the purchase.

Any mortgage with less than a 20% down payment is known as a high-ratio mortgage and requires you to purchase mortgage default insurance, commonly referred to as CMHC or Genworth insurance.

Along with the application, we will request a signed consent to pull a credit report.  The credit report will reveal how well you have managed credit.   We will also request documents to support the income reported on your application.  

We ask for your understanding and cooperation during this initial process, as there may be many other questions we will ask.  The information you provide is then reviewed by the lender prior to agreeing to lend you money.  Your honest answers to these questions will help us to work with you and guide you into the best mortgage based on your situation.

There are several ways you can submit an application to us. You may apply on-line here (link to app), by phone or in house, our office or your location. We can also fax you an application form if you wish.

*We do have some institutions that can still offer the 5% down payment as cash back – NOTE: this is a higher interest rate product.

Finding your perfect home can be a long process. A realtor will help identify the right type of home for you and continually research new listings in neighbourhoods that meet your needs. After seeing many different homes, you have finally found one worthy of an offer! What are the next steps? Your realtor will create an Agreement of Purchase and Sale to the vendor (the owner of the home). This is known as the offer. An offer is a legal agreement to purchase a home and can be made conditional on factors such as financing or a home inspection, etc.. If any of the conditions are not met, you can change or cancel the offer. Once all of the conditions are met, it is a legally binding agreement between you, the buyer and the seller. We strongly recommend that you have a financing condition included in your offer even if you have a qualified preapproval with us. There are many different factors that the lender will take into consideration on a particular property, including square footage minimums, zoning requirements, etc.

Once your offer is accepted, you usually have 7 – 10 business days to meet your conditions set forth in the offer. At this time your realtor will send us a copy of your offer and we will then submit your application along with the offer and MLS listing to the lender. If it is a private sale, a Purchase and Sale Agreement can be done up by your solicitor. We will set out to have a commitment from the lender for you to sign within this time frame so that you may waive your financing condition by the time allotted on the agreement. Which brings us to the next step.

It is our job to sell your application to the home mortgage lenders and make sure you get the best possible rate and terms for your situation. At this time, the lender has reviewed the application we have submitted, along with the P & S (Purchase & Sale) agreement and MLS listing. All of those details have been met by the lender and they now will issue a commitment of approval for your new home loan.

This approval will be subject to meeting certain conditions. It will state which documents the lender requires such as NOA’s, T1 Generals, paystubs, employment letters, etc. and a bank statement to prove you have enough savings for your down-payment. We usually request these documents from you upfront and already have them on file.

If it’s a private sale or a conventional mortgage (conventional mortgages usually refer to 80% and under LTV loan to value and also usually not insured by a mortgage insurer) there might be a condition to have an appraisal to confirm value of the property.

Each client’s commitment is different and targets specific criteria. The commitment comes to us directly. We then build, what we refer to, as the “signing package”.  

As we review this commitment of approval with you, we still have the ability to change the rate and term, payment amount or frequency, etc. (as long as your ratios are still in line with what is acceptable to the lender). 

We can send the “signing package” by email or review it with you at our office.   In either case, we review this package with you page by page, either in person or over the phone.  Besides the commitment of approval, there are other documents included in “signing package”. We are required by law to provide certain information; fees, closing costs, mortgage insurance, etc. We go over all of this and provide a copy of the signed documents to you.  It’s quite painless…Really!

Once you have chosen a real estate lawyer to work with, we provide their contact information to the lender. As part of our service to you, we then forward all of the documentation your solicitor requires to their office. In time, the lender sends “Instructions” to your lawyer’s office. These Instructions are similar to the Commitment that we receive only this time now with a list of conditions that your solicitor is mandated to meet on your behalf. These conditions could consist of providing house insurance verification, obtaining the bank draft or certified cheque for the closing funds, etc. You will have a meeting with your lawyer prior to closing to confirm all of the details and provide legal signatures. The lawyer receives the funds from your lender and disburses to the seller or builder of your new home.

If you don’t have or know of a lawyer, we will be glad to refer you to one.

Pick up keys at your lawyer’s office on the day of closing. It is crucial that you visit your newly purchased home/condo the very same day to make sure everything is to your satisfaction and in line with your home buying contract.