The Mortgage Process
I Found My Dream Home, Now What?
When you make an offer to purchase a property a clause in the contract will allow you the time needed to fulfill any of the lenders conditions that are outstanding. When you are pre-approved you know that the lender likes you, but they have no details on the property you want to buy. In most situations an appraisal will be ordered to determine market value or CMHC / GE will have to approve your purchase. Once all the conditions to your pre-approval have been met you are ready to remove your "subject to financing clause."Â
Self Employed Buyers
In Canada more people are now self-employed than ever before. Home-based businesses comprise a substantial part of the overall work force. Self-employed individuals have the ability to write off their expenses, such as "office in the home" and depreciation. This means that a net income figure will often be low and will make qualifying for a mortgage and other credit much more difficult. In fact while the face of the working population has changed, lenders, for the most part, have remained steadfast in their approach to underwriting credit risks.
There are a few lenders however, who have made the move to understanding that income should not be the single most important qualifying factor when determining credit risk. As Mortgage Brokers we have access to lenders who will lend up to 75% of the value of a home without being concerned about income. Interest rates will typically be at Bank Posted rates. At 65% of the value of a property discounted bank rates can apply. Now you can be an Entrepreneur and a Good Credit Risk at the same time. Contact one of our brokers for details…
Revenue Property Buyers
Lenders differ greatly on how they view revenue property. The underlying logic is that if times get rough, the mortgage on a revenue property will be the first thing that will be allowed to slide. CMHC uses a very restrictive formula when assessing a revenue property purchase. There are lenders who will use this same formula which is an indication of how much revenue property mortgages they want in their lending portfolio. Fortunately there are other lenders who will take a more favorable look at qualifying this type of purchase by using what is called "the offset method." This method takes a portion of the potential revenue from the property and deducts it directly from the new mortgage payment, leaving the borrower to qualify to supplement any shortfall. Again, lenders vary on how much of the property revenue they will use. Talk to your Mortgage Broker, we know which lender wants your business.
Vacation Property Buyers
This type of purchase will leave a potential borrower feeling lonely. Most lenders are leery because if the financial going gets tough a borrower may not make their payments on this secondary property. Typically a lender will require 35% down payment on this type of purchase.