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Arranging a Mortgage

Arranging a Mortgage

If you reside in Canada and have good credit history a new mortgage can be arranged quickly. If you do not reside in Canada you can also obtain mortgage financing although the process is longer. The first issue the banks will look at is your property value.

If you are purchasing a property at market value, a property that is listed for sale on the MLS, you should be fine. The banks will issue a loan at 65% to 85% of the purchase price. Non resident buyers will have to stay at the 65% range and Canadian Residents can apply to extent the LTV ratio over 85%.

The interest rate can be fixed or variable and the rate will change with the term. Banks offer short term mortgages (6 months, 1 year) and long terms (3 years, 5 years and 10 years.) If you choose a fixed term mortgage you should understand that a discharge fee applies if you will need to pay the mortgage before the end of the fixed term.

The number of years needed to pay off the loan is called amortization. Investors should look at amortization of 20 years or longer for the interest deduction to be large enough to benefit them. Banks will usually offer investors a 25 years amortization.

The first step in the process would be a mortgage application. Once pre-approved by the bank the buyer can start the process of buying a property. When a property is found a visit in person at the brunch is usually needed to complete the mortgage application process.