416-785-2725 info@kemfinancial.com

A Step by Step Mortgage Process

Determining The Budget

Determining your budget for your new mortgage is the first place to start before buying a home. Loan approval guidelines are weighted heavily in favour of your ability and willingness to prepay the loan. Determining how much you can afford to pay each month is the best place to start to ensure success. Once received, we review your application and start the loan approval process immediately by verifying all information you have provided.

Mortgage Rate Comparison

After collecting all the documents and selecting the mortgage rates, your mortgage broker compare the rates from various lenders to best fit your needs and select one who provides the best cheap rates.

Selecting the Mortgage Rate

There is a wide variety of mortgage products available for the Canadian mortgage consumer. Your specific needs will determine the type of mortgage you are getting. Whether you’re buying a home or refinancing, there are four basic types of Canadian home financing loans:

Fixed Rate Mortgage

Fixed rate mortgages usually have terms that are typically 5 years, but are available up to 25 years. Throughout those years, the interest rate and monthly payments remain the same. You would select this type of loan when you:

  • Plan to live in the home for at least 5 years.
  • Like the stability of a fixed principal/interest payment.
  • Don’t want the risk of future monthly payment increases.
  • Believe that your income and spending will stay the same over the term.

Adjustable Rate Mortgage

Adjustable Rate Mortgages typically last for 3 to 5 years. Monthly payments can increase or decrease during that time period depending on the Bank of Canada lending rate. You would select this type of loan when you:

  • Plan to stay in your home less than 5 years.
  • Don’t mind having your monthly payment periodically change.
  • Comfortable with the risk of possible payment increases in future.
  • Think your income will probably increase in the future.

Combination Rate Mortgage

Combination rate mortgages combine fixed interest rate and adjustable interest rate products. You would select this type of loan when you:

  • Want to manage interest rate risk.
  • Want to take advantage of both long and short-term rates.
  • Don’t mind having your monthly payment periodically change.
  • Like the stability of a fixed principal/interest payment.

HELOC Home Equity Lines of Credit

Lines of credit have become an innovative way to finance your home purchase. This new line of credit is fully open for repayment without penalty and can be used for any purpose.

80% Home Equity Line of Credit:

  • LTV Maximum: Up to 80% Canada Wide.
  • Rate: Variable rate, floats based on Prime Rate.
  • Can be placed behind most first mortgages without incurring penalties. No need to change or transfer your current first mortgage.
  • Flexible repayment options – you can just make the required interest payment or pay a larger amount up to the entire balance.
  • You can use some or all of your available line of credit at your convenience.
  • Your line of credit has no expiry date – it’s yours as long as you need it.

Submitting Documents

You will the asked to submit the sufficient documentation to support your mortgage application. Documentation required depends on the type of mortgage you are requesting, and where you’re source of income originates.

If you are self-employed, you’d be required the following:

  •  T-1 Generals
  • Notice of Assessments
  • Corporate tax returns

If you are an employee, you would be providing:

  • A recent pay stub
  • Letter of employment
  • Current T4s.

Mortgage Application Submission

Once application is completed with all the documents, mortgage agent will submit your application for pre-approval or approval.

The pre-approval process allows you to obtain a locked-in interest rate and term product for a period time (typically up to 120 days) so you can focus on finding that perfect home.

Mortgage Approval

The mortgage agent typically receives reply from lender the same day. If application is approved, the mortgage commitment is sent to the client via email or fax to review. Your mortgage agent will review the approval commitment with you. It is also a good time to re-affirm your needs and length of time you intend to hold the mortgage.

This discussion will ensure that the right mortgage product has been identified for your needs.

Additional Documents

Any additional documents that the lender may request should be sent to the mortgage associate no later than 10 days after the mortgage approval has been received.

Instructions for Lawyer

After your loan is approved, you are ready to sign the final loan documents. You must review the documents prior to signing and make sure that the interest rate and loan terms are what you were promised.

There are also several fees associated with obtaining a mortgage and transferring of property ownership, which you will be expected to pay at closing. Bring a bank draft for the down payment and closing costs, if required (Personal checks are normally not accepted). Your mortgage-financing loan will normally close shortly after you have signed the loan documents.