8 - Mortgage Basics

8 - Mortgage Basics

Financing your new home with a mortgage doesn’t have to be the most stressful part of your move. The more you learn about mortgaging and how it works, the easier your decisions will be. Knowledge will better equip you to protect your interests. 
Here are some basic things to know before you get started:

Where to Get Mortgage Funding

There are many options for obtaining a mortgage, including:

  • Mortgage Brokers
  • Credit Unions
  • Loan or Finance Companies
  • Trust Companies
  • Chartered Banks
  • Life Insurance Companies
  • Private Placements
  • Sellers

What is Required to Apply

  • A copy of the “Agreement of Purchase and Sale”
  • A copy of the listing, and survey of the house
  • Verification of your income annually
  • Verification of your investment into the new home (down payment)
  • Payment cheque for application processing and home appraisal

Conventional Mortgage

The amount of the loan must not exceed 75% of the home’s APPRAISED PROPERTY VALUE (not the purchase price). 

National Housing Act (NHA) Mortgage

Granted under the 1954 National Housing Act, these lenders are protected against losses by the Canada Mortgage and Housing Corporation (CMHC).

Collateral Mortgage

A loan that is secured first by a ‘Promissory Note’, and then also secured by a mortgage on the new home.

High Ratio Mortgage

A loan that exceeds 75% of the home’s appraised property value, which must be insured if obtained through a trust company or a brokerage.
 

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