Acquiring a property can be overwhelming, fun, and stressful, and it comes with many decisions to make. Decisions such as the type of property, location, and even the financial budget are vital decisions to be made when acquiring a property. The hunt for a property requires many step-by-step preparations, and one of those areas to prepare more is a mortgage application.
Before we look at the few tips on the mortgage in Toronto, let’s understand what the Word mortgage means. A mortgage is a unique form of secured loan where the purpose of the loan is to purchase assets that must be fixed or immovable such as a house or land. A mortgage is a way to buy a home without having all the funds required for purchase. So it’s okay to say a mortgage is just one of the many ways to achieve a homeowner’s dream.
HOW MANY PARTIES ARE INVOLVED IN A MORTGAGE?
There are only two parties involved in a mortgage; the mortgagor and the mortgagee. The mortgagor is the person seeking the loan funds to acquire a home. The mortgagee is the financial institution that gives the loan for the property acquisition. The financial Institutions include; Banks, Mortgage Companies, Trust Companies, Insurance Companies, Credit Unions, Loan Companies, etc. The mortgagor is the borrower, while the mortgagee is the lender. The mortgagee makes the needed funds available in a loan to the mortgagee, and the home purchased will act as collateral. If the mortgagor cannot pay up for the mortgage, the mortgagee takes ownership of the property.
HOW TO SECURE A MORTGAGE LOAN IN TORONTO
Now, it is essential to note that not all mortgage application gets approval from the financial institutions. The refusal can be a result of incomplete information about the necessary mortgage application requirements. Also, securing the best mortgage loan rate requires an extensive market evaluation process. You cannot depend solely on one mortgagee or one lender to get the best mortgage deal. The possibility of loan rejection and many more reasons are why information and knowledge about loan applications are beneficial. This information helps you know the factors to be put in place while getting a mortgage loan. These tips below focus on securing mortgage loans. They will give you a more substantial application advantage, especially when securing a mortgage loan in Toronto, Canada. To ensure the best mortgage loan rates in Toronto, here are a few tips:
- Revisit Your Credit History: financial institutions such as Banks, insurance companies, mortgage companies, etc., will require your credit history to ascertain your creditworthiness. If you have an account of difficulty or refusal to pay back loans, chances of securing the mortgage loan needed to acquire a property can be affected. You can report your inaccuracies in a credit history to major credit bureaus in Canada. If there are previous debts that you have been unable to pay, you have to pay them off quickly to increase your chances of securing a bigger loan as a mortgage. Interestingly, one of the new mortgage rules in Toronto for 2021 explains that home buyers will require a credit score of 680. The recent update is 80 points more than the initial requirement of 600.
- Put Your Documents in Order: when applying for a mortgage loan, the mortgagee will want in-depth information, and your capacity to repay the mortgage loan is given. To get this done, you must put your documents in place and up to date to provide you with the necessary boost needed in securing your loan. These are the things the lender will put into consideration before giving you a mortgage loan. The documents include:
- Personal Identification Documents: the lender wants to know who is acquiring the mortgage loan, so certain documents are required. These requirements include documents that clearly show your identity. Identity here talks about;
- Your full name
- Date of birth
- Marital status,
- Driver’s license or passport
- The total number of people dependent on your income to live; your children, relatives, employees, etc.
- Your current contact address and current contact number
- Job History: job history documents tell the lender about where you have worked, where you are currently working, your updated income records. These documents require information such as:
- Letter of employment
- Recent Paystubs
- Bank statements
- Validation of income
- Business or incorporation license for self-employed
- Tax returns
- Personal Financial Record: these are your financial records that show everything you do related to money. A history of your finances is very vital in securing a mortgage loan. They consist:
- Bank account number
- A compilation of your assets, if any
- A collection of your liabilities, if any
- Credit Report
- Get A Mortgage Pre-Approval Letter: it is best to get a pre-approval letter when applying for a mortgage loan. This letter should be taken along to the bank with other documents when applying for a mortgage loan to have a stronger application advantage.
- Detailed Information About The Property: while applying for a mortgage loan, you stand a higher chance of getting the mortgage loan when you provide detailed information about the property you need the mortgage to acquire. This information can be:
- The address of the property, including postal code and if the was purchased through a Realtor, there should be a copy of the real estate listing
- If it is a property under construction, information regarding the plan should be provided
- The amount of condominium fee, if applicable
- A signed document of agreement of purchase and sale
- Detailed Information of Other Properties Owned: information on other properties owned by the borrower will be required. Information such as;
- The full address as the lender would be interested in knowing the financial value of the borrower that is invested in real estate.
- Rent or Lease agreement: by this information, the lender will determine the income generated by the borrower from rentals of properties.
Through this article, we trust that you see a significant possibility of becoming a homeowner without the required finance, and that way is through a mortgage loan. Following the tips above and obtaining the above-listed documents will give you an edge in securin