Mortgage Guidelines

Applying For Your Mortgage
A list of items you might want to bring to your financial institution when applying for a mortgage:

  • A copy of the accepted Offer to Purchase and the land survey.
  • A salary letter from your employer. If you are self-employed financial statements for the past three years as well as personal income tax returns.
  • Confirmation that your down payment came from your own resources (i.e. 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.

This will help determine how much you can afford for a mortgage or obtaining a pre-qualified approval for a mortgage. Your mortgage agent will help you select the type of Mortgage that's right for you. This allows you to act quickly when you find the perfect home. A drawn up Offer to Purchase between you and the vendor which is an agreement that sets the final price and all the conditions of sale can be taken back to your mortgage agent and the deal can forward quickly.

Selecting a Mortgage
The basic choices to look at in selecting a mortgage include:

  • Conventional or high ratio mortgages.
  • Short term or long term.
  • Specialty mortgages
  • Closed or open mortgages.
  • Fixed rate or variable rate.

A conventional mortgage is a loan for no more than 75% of the appraised value or purchase price of the property, whichever is less. A high ratio mortgage is usually for more than 75% of the appraised value or purchase price.
The term you select is important too. Short term mortgages are appropriate if you believe interest rates will drop come renewal time. Long term mortgages are suitable if you feel current rates are reasonable and you want the security of budgeting for the future. This is especially important for first time homebuyers. The key is to feel comfortable with your mortgage payments
You can choose a fixed or variable interest rate. A fixed rate mortgage allows you to budget precisely for whatever term you select anywhere from one to occasionally 25 years. A variable rate fluctuates with the market.

Pre-Approved Mortgages
If you are a first time buyer, before you begin your search for a home contact your financial institution and get a pre-approved mortgage.  A pre-approved mortgage lets you know how much money you qualify for, so when you're looking at houses, you will know what you can afford.
With a pre-approved mortgage you how much you can borrow and the payment schedule you will be required to meet for that amount of borrowing. This enables you to determine the price range you can afford before you begin your search.  

Mortgage Prepayment Privileges
East mortgage type has various features and you should look into them all and pick the one that best suits your financial situation.  Determine the pre-payment privileges of the various financial institutions. These privileges let you pay down your mortgage faster. Also be aware that the longer the amortization period (the time it takes to pay off a mortgage), the more interest you will end up paying. Paying weekly or bi-weekly instead of monthly can cut down on the amount of interest you pay. Amortization periods range from five to twenty-five years.
Another option to consider is portability. If later, you decide to sell your home and buy another, you should be able to take your mortgage with you or transfer it to the buyer of your home without penalty. This can turn out to be a major advantage if your mortgage rate is below current market rates.

Mortgage Life Insurance
You should look at mortgage life insurance, especially where two incomes are involved. You can incorporate the insurance cost with your mortgage payments. Your balance will be paid in full (the maximum varies with different financial institutions) in the event of death, terminal illness, or permanent disability. It is a good idea to research this plan as well.