Step 1: Mortgage Application
- Before an application gets filled out, it’s important to first asses yourself financially. Figure out how much money you have and how much you need to borrow. It’s always critical to sort out how much you can afford so that when you apply for a mortgage you will be able to financially sustain yourself.
- A mortgage associate will then take an application by phone, in person, or online. Once it has been received, the mortgage application process will begin by verifying the information you have provided.
Step 2: Choose the Right Mortgage Program
- Like all homes, Canadian mortgages also come in all shapes and sizes. You have to pick which loan is more aligned with your financial situation and goals. There are four basic types of Canadian home financing loans.
Fixed Rate Mortgage
- A Fixed Rate mortgage usually has terms that can last from 1 year 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 like the risk of having a higher monthly payment
Adjustable Rate Mortgage
- Adjustable Rate Mortgage (ARM) lasts for 3-5 years. But 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 say in your home for less than 5 years
- Don’t mind having your monthly payment increase or decrease
- Are comfortable with risk of possible payment increases in the future
- Think your income will probably increase in the future
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
Lines of Credit
- Line of Credit is becoming an innovative way to finance your home purchase. You can take the amount you need from the credit limit that you were granted. You only pay interest on what you use and this money can be put towards things like home renovations, a child’s education, and debt consolidation.
Step 3: Mortgage Submission and Approval
- Once you select the appropriate mortgage program that works for you, your Mortgage Agent will submit this information along with any other required documentation.
- The waiting game for mortgage approval is only 1-2 days.
- After the approval, the Mortgage Agent will review your commitment to the mortgage.