Many individuals, particularly first time homeowners, may wish to purchase a residential property and are not familiar with the processes and costs involved in acquiring a home. They may be unaware if they can qualify for a mortgage and may have several questions from the time a property is located to the finalization of a mortgage.
Q – Should I make a down payment on a property prior to obtaining mortgage financing?
A – You should first visit the Home Mortgage Bank to determine how much you can afford to borrow as this information could assist in determining whether you can afford the property that you are interested in buying.
Q – What is the underlying criteria in granting a mortgage?
A – Affordability, job stability and good security are the primary factors used to measure the quality of a mortgage loan during the mortgage negotiation process.
Q – Once I have found my “dream home” what is the average timeframe to finalize the transaction?
A – Once a down payment has been made on a property, a purchase agreement is signed giving the purchaser ninety (90) days to complete the purchase of the property. The legal process to have the property title transferred usually takes between 4 to 6 weeks, so it is in your interest to apply for the mortgage as soon as the purchase agreement is signed in order to complete the transaction in 90 days.
Q – What does the legal process consist of?
A – Once a property is being purchased the title needs to be searched to ensure that the land is properly vested in the Vendor and is free from all encumbrances. If the title is good, the Attorneys-at-law would prepare a Deed of Conveyance to transfer the title from the Vendor to the purchaser. If a mortgage loan is being obtained, the Lender’s Attorneys would be instructed to prepare a Deed of Mortgage between the Lender and the Borrower, outlining the terms and conditions of the loan.
Q – What percentages of the property cost can I borrow?
A – The Home Mortgage Bank may lend up to 90% of the cost/value of the property.
Q – What are the costs involved in purchasing a property?
A – In addition to the downpayment, “closing costs” would include a Valuation Report, Quantity Surveyor Report (for construction), bank commitment fees, fire insurance premiums, legal fees for both the Deed of Conveyance and Deed of Mortgage, Stamp Duty (for properties exceeding $450,000 in value).