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Mortgage Application Process

With so many financing options available today, choosing the right one for you can seem like a challenge. That is why we are committed to honestly and responsibly working with you to find an option that fits your budget.

If you have more questions after reading this information, feel free to give us a call at 604-850-5040 and we can help you determine your options. All of our consultation services are free of charge.

Pre-Approval

Getting a pre-approval on your mortgage will provide you with:

  • Written approval from a lender for a specific loan amount, so you know exactly what homes to look for and in what price range you can purchase.
  • The peace of mind of knowing that you have been approved, and financing will not be an obstacle in buying your home.
  • The ability to make an offer with maximum credibility, which shows the seller that you are serious about buying.

Follow the steps below when applying for a mortgage:
Step 1: Meet with a Loan Officer or Mortgage Broker to complete a residential mortgage application.
Step 2: Provide the Loan Officer with the requested series of documents to support your income, savings, and expenses.
Step 3: The Loan Officer will begin processing your application by ordering an appraisal of the home, by obtaining a copy of your current credit report, and by making written requests to verify your employment and bank account balances.
Step 4: After completing your application, the lender will provide you with an estimate of closing costs and a booklet containing information about the closing costs you may incur in the transaction.
Step 5: Once the lender receives your credit report, appraisal, and all the written verification requests, your loan package will then be forwarded to the underwriting department, where they will evaluate your loan package and will either approve or deny the loan, according to their policies and guidelines.

Selecting the Best Mortgage for You

The basic features to consider when selecting a mortgage include the following:

Conventional vs. High Ratio

A conventional mortgage is a loan for no more than 80% of the appraised value or purchase price of the property, whichever is less. The remaining amount comes from the borrower’s own resources and is known as the down payment.

A high ratio mortgage is used for loans that exceed conventional mortgage lending guidelines. The borrower will have to pay the insurance premium, which can range from 0.50% to 3.75% of the total mortgage amount and is typically added to the principal amount of the mortgage. With a high ratio mortgage, people can purchase a home with as little as a 5% down payment. This type of mortgage must be insured against default through Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Mortgage Insurance Company Canada (GFMICC).

Closed vs Open

A closed mortgage is for a fixed term and has fixed prepayment options. A closed mortgage usually offers a lower interest rate than an open mortgage.

An open mortgage may be for the same term as a closed mortgage, but any amount of principal may be paid off at any time, without penalty.

Fixed Rate vs Variable Rate

A fixed rate mortgage carries the same interest rate for the entire term. It allows homeowners to budget for any term selected, from six months to ten years.

A variable rate mortgage is tied to an underlying interest rate, like the prime lending rate, and will rise or fall with changes in that underlying rate.

Short Term vs Long Term

A short-term mortgage is usually for two years or less. Short-term mortgages are appropriate when someone believes interest rates will drop come renewal time.

A long-term mortgage is generally for three years or more. Long-term mortgages are suitable when current rates are reasonable, and borrowers want the security of budgeting for the future. This may be important for first-time homebuyers.