Mortgages Explained When Buying a Condo In London Ontario
When purchasing a real estate property, be it a condo apartment or a townhouse, unless paying cash, consumers typically finance all or a portion of the purchase price. Financing means borrowing money from a financial institution to buy, using the intended house or condominium as collateral for the loan.
Mortgage payments include the principal (the amount borrowed), and the interested (the amount charged for borrowing the money). Payments can be made once a month, bi-weekly, or weekly, depending on availability from the lender. A typical mortgage is for an amount that does not go over 75% of the appraised value of the property or the purchase price, whichever is lower. That means 25% of the purchase price is the down payment. However, with a high-ratio mortgage, you may pay less than 25% of the cost of the home as a down payment.
Home mortgages are available from several types of lenders: banks, mortgage companies, trust companies and credit unions. Different mortgage lenders may quote you different prices, so you should contact several lenders to make sure you’re getting the best price. You may also get a home loan through a mortgage broker. Brokers arrange financial transactions rather than lending money directly; in other words, they find a lender for you. A broker’s access to several lenders can mean a more comprehensive selection of loan products and terms from which you can choose.
Typically it takes a few days to receive approval for a mortgage. It is recommended to get pre-approval for before you start and go out looking at properties. When you put in your offer to buy, this is almost always on the condition of getting mortgage approval as this assures everyone involved that you can pay back the mortgage without defaulting.
Qualifying For A Mortgage
The process involves submitting your financial paperwork to a potential lender and receiving approval for a pre-determined mortgage amount. The pre-approval agreement may also guarantee an interest rate for a mortgage taken out during the 60 to 90-day pre-approval term. The mortgage lender will inquire about such things as your marital status, some dependents, age, current employment (including how long you have worked there), salary, as well as other sources of income. They will ask for a list of your assets (i.e. vehicles, cash, etc.) and liabilities (i.e. credit card balances, car loans, etc.). Lenders also do a credit check to find out if you pay your bills on time.
To qualify for a mortgage, the applicant’s gross annual income, credit history, and assets and liabilities (past or present) all impact the outcome. Here is a mortgage calculator to help you figure out the amount of mortgage you may get..
Types of Mortgages