Like finding your dream home for sale in Toronto, obtaining a mortgage is easier said than done. That being said, when you approach getting a mortgage the right way, the process can seem less intimidating and confusing. We broke down the mortgage process into a few steps, to make it seem a little easier.
In order to apply for a mortgage, it’s always best practice to assess your financial situation first. Simply put, you need to know much money you have and how much you will need to borrow. In order to see what type of mortgage you can afford, follow this link to our mortgage affordability calculator. It’s important to factor in all the future costs now, in order to avoid any unwanted surprises down the line.
There are many dream homes for sale in Toronto. There are also many different mortgage plans in Canada you can choose. Here, we will go over the four types of Canadian mortgage types.
a) Fixed Rate Mortgages
Fixed Rate mortgages can last typically anywhere from 1 to 10 years. For the agreed upon term, all monthly payments and interest rates will remain the same.
You should consider a fixed rate mortgage if you:
b) Adjustable Rate Mortgages (ARM)
The average Adjustable Rate Mortgage (ARM) will last anywhere from 3 to 5 years. The main difference between an ARM and a fixed rate mortgage is how the interest rate on the loan can fluctuate up or down over the course of the loan.
An ARM appeals to those who:
c) Combination Rate Mortgages
A Combination Rate Mortgage involves the combination of both adjustable interest rates as well as fixed
Combination Rate Mortgages are ideal for those who:
d) Line Of Credit
Taking out a line of credit to finance home purchases has become more of a trend. Borrowers pay interest only on the money they spend. Using this method to secure a down payment can be risky, so it’s important you have a solid repayment strategy in place.
After selecting the type of mortgage you prefer you and your mortgage associate will send your mortgage application to be processed. Once you’ve received confirmation, it is then time to review your commitment to the mortgage. One you feel comfortable enough with the mortgage agreement, you are ready to have a lawyer review the necessary documentation
Before you sign off on your mortgage, you need a lawyer to review and sign the documents. They will conduct a review all the terms and conditions prior to signing to make sure everything is in proper order.
They will make sure that the:
When you sign the mortgage, a notary public or lawyer will be present. You will bring a bank draft check (no personal cheques) for down payments and any necessary closing costs. In addition, the homeowners insurance policy and other requirements such as flood or fire insurance and proof of payment will need to be provided.