Making a decision of obtaining a mortgage is possibly the biggest financial decision that anyone can make, as it usually becomes their biggest asset. In case you have any thoughts of buying real estate, there are top mortgage lenders in Canada that can help you turn your ambitions into reality. You must however first understand the processes that are involved. Below we have outlined the mortgage processes involved while purchasing a property in Canada.
Basic Steps To Purchasing A Property:
- Obtain a mortgage Pre-Approval through your Vancouver Mortgage Broker by providing basic details, and standard documentation (see below).
- Start viewing properties with your Realtor, and write an Offer To Purchase on your property of choice.
- Work with your mortgage broker to meet any remaining lending conditions.
- Remove the financing subject after being advised by your mortgage broker.
- Complete the transaction at the lawyer’s office, and take Possession!
Standard Documents List
Down Payment: Bank statements showing 90 days history of funds. If proceeds are from property sale, provide full Contract of Sale. If proceeds are gifted, provide a signed Gift Letter and deposit proof of gifted funds.
- Employed: Letter of employment & latest paystub
- Self-Employed: Last 2 years of T1 Generals
- Commissioned/Casual: Letter of employment & last 2 years of Notice of Assessment’s
- Retired: last 2 years T4s, & latest Worker Pension statements, CPP, OAS
Void Cheque: authorizing direct payment withdrawal
Budgeting for Your Purchase
In addition to the downpayment, we will help you budget for any other related costs to your purchase. Additional costs to budget for depend on the type of property you are purchasing. We have outlined most of the potentials below:
High Ratio Mortgage Insurance Premium
When a property is purchased with a downpayment of less than 20%, Canadian banks and lenders require the mortgage to insured. One of three Canadian insurers (CMHC, Genworth, or Canada Guaranty) will co-approve the new financing and add the mortgage insurance premium to the balance of the mortgage.
BC Property Transfer Tax
All first-time home buyer’s in BC are exempt from this tax if they are purchasing a property of $475,000 or less. For every additional property purchase, the provincial property transfer tax must be paid in full. BC Property Transfer Tax is calculated from the purchase price as 1% of the first $200,000.00, plus 2% of the remainder.
A Lawyer or Notary Public will review all the documents related to the purchase, complete the lender’s mortgage instructions, perform a property title search, and finalize all details related to completion. These fees will vary for each firm, but expect approximately $800 – $1100 in legal fees to complete on your home.
The Home Inspection
A professional home inspection is your insight into the real condition of a property. An excellent home inspector will also recommend efficient solutions to any outstanding issues. This inspection should be completed only after your mortgage financing is secure, so you are not out-of-pocket any fees until you know you’re ready to purchase.
An appraisal is a researched estimated of the current value of your property. An appraisal may be required for a purchase depending on the downpayment amount and lender policy, and are always required when it’s a private sale. An appraiser will attend the property typically for less than 30 minutes and will then compile a detailed report outlining their process and results. The fee for a reputable appraisal company is usually between $3250 to $350. the home.
Home Insurance / Contents Insurance
The new lender will require the new property be insured. The property is security for the mortgage loan they are providing you, so the home and its contents must be protected.
Property Survey / Certificate of Location
If a survey is not on file at the local city hall, the new mortgage lender may require a recent survey of the purchase property. A property survey can cost $1,000 to $2,000. Alternatively, and more economically, purchasing Title Insurance while completing at the lawyer’s office will satisfy this requirement and protect you from inaccuracies in the survey document or even fraud.
Municipal Property Tax / Utility Bills
Municipal property taxes are to be paid by the Summer of each year. These taxes vary slightly annually and based solely on the municipality. If taxes have already been paid for the year, the remaining portion will be calculated at completing and refunded back to the seller. You may opt out of having the property taxes to be collected with your mortgage payments. Ask how
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