Obtaining a mortgage can seem intimidating and confusing, but fear not. Similar to the buyer and seller guides, I’ve outlined the mortgage process for you in 4 easy steps:

Step 1: Mortgage Application

First off, financially assess yourself. Determine how much money you have for a down payment and how much you will need to borrow. Regardless of what you are ultimately approved for, it’s of critical importance to ascertain what you can afford on a monthly basis, so that you are able to financially sustain yourself once your mortgage has been granted. A mortgage broker (bank) will then take an application by phone, in person, or online. Once it has been received, the mortgage application process will begin by verifying all the information you have provided and comparing that to your income, debt, and other resources. Once approved, you will know the maximum purchase price you are approved for and how much your monthly mortgage payment will be. 

Step 2: Choose the Right Mortgage Program

Like all homes, Canadian mortgages come in all shapes and sizes. You have to pick which loan product is more aligned with your financial situation and goals. There are three basic types of Canadian home financing loans:

A) Fixed Rate Mortgage

A Fixed Rate Mortgage usually has terms that can last from 1 to 10 years. As the name suggests, the interest rate and monthly payments will remain the same for the specified term.

This type of loan should appeal to you if you:

  • Plan to live in the home for more than 5 years
  • Like the stability of a fixed interest payment
  • Think your income and spending will stay the same
  • Don’t want to run the risk of having a higher monthly payment

B) Adjustable Rate Mortgage

An Adjustable Rate Mortgage (ARM) typically lasts for 3-5 years. During these terms, the interest rate on the loan can go up or down, which means monthly payments can increase or decrease.

This type of loan should appeal to you if you: 

  • Plan to stay in your home for less than 5 years 
  • Are comfortable with the risk of possible payment increases in the future
  • Think your income will probably increase in the future

C) Combination Rate Mortgage

A Combination Rate Mortgage combines fixed interest rates and adjustable interest rates.

This type of loan would appeal to you if you:

  • Want to manage interest rate risk
  • Choose to take advantage of both long and short term rates
  • Like the stability of a fixed interest payment
  • Don’t mind having monthly payment increase or decrease

Step 3: Mortgage Submission and Approval

Once you select the appropriate program, you will submit this information to your mortgage broker along with any other required documentation. After the approval, the broker will review your commitment to the mortgage. Any additional documents that are required by the lender should be sent in no later than 10 days after the approval.

Step 4: Lawyer

The lender will send the mortgage instructions to your lawyer to review and execute. Signing takes place in front of a notary public or lawyer. There may be fees associated with obtaining a mortgage and transferring property ownership which will be paid at closing. Bring a bank draft for the down payment, closing costs, and land transfer tax (if applicable). You will also need to show proof of homeowner insurance.  After the ink is dry and the money has changed hands, you will receive the keys to your new home. Easy peasy. 


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