Getting a mortgage in Toronto doesn’t need to be confusing. The process takes several steps, but when broken down, it’s easy to understand how these stages work and how to make the most of them.
At Northwood Mortgage, we work with home buyers across the GTA and surrounding areas. We understand the finer nuances of the Toronto housing market. Here’s a step-by-step guide to the approval process to simplify things.
The First Chat
The first step in any mortgage approval process in Canada is the meet-and-greet or first chat on the phone. This is when you speak to a broker about your wants as a home buyer and find out the amount you’re likely eligible to borrow.
The first chat also lets you feel out a mortgage broker or lender and determine if they’re a good fit for you. This only takes 10 to 20 minutes, but it will likely be another 24 hours before you hear back about the next step.
Before anything is set in stone, you must complete a mortgage application, which a broker or lender reviews. This is also the pre-approval portion of the process. Through the application, your eligibility as a borrower is determined through;
- A credit check
- Proof of income
- Record of debt (credit cards, personal loans, additional mortgages, etc.)
- Recent tax records
These documents are important for figuring out the right type of lender for you. Some applicants are better suited to nontraditional lenders, while others have their pick.
The application process takes one to two days to complete, depending on the number of background checks needed to confirm your income and debt.
Finding a Lender
Finding a lender takes a little elbow grease on the part of your broker. After processing your application and determining the best type of terms for your situation, your broker approaches lenders that they think would be a good fit.
Most lenders take somewhere between 24 to 72 hours to get back to a broker after reviewing and processing an application.
Once your broker finds a lender they like, the mortgage underwriting process begins. This is a time when the lender evaluates your risk to them based on their unique qualifying factors.
Your application and accompanying documents play a role in this part of the process.
Your broker likely knows the fastest lenders to apply to in rush situations, but you can bet a good lender is busy with multiple applications. If a lender takes too long, it could mean your application isn’t up to their standards.
Don’t worry, though. In this case, your broker simply submits to the second lender on their list of potential mortgage candidates.
Approval and Commitment
Congratulations! You’ve been approved. Now, you must go through an electronic copy of the conditions known as the commitment.
It includes different variables that need to be met or proved before your approval is fully realized. If you agree to the commitment guidelines and sign the application, you’re in the clear.
Registering the Mortgage and Final Fees
The mortgage must be registered with the Land Titles Office, and your lawyer is given an offer to purchase. Some paperwork is signed, and final fees are provided, including your down payment and any closing costs.
On the final date for funding, your lawyer receives funds in a trust and finances are distributed where necessary for the purchase of your home.