Mortgage Financing Matters

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Financing Conditions
In case financing is required, it is highly recommended that any Agreement of Sale and Purchase should be conditional upon a confirmation (in writing) of the financing terms and conditions as specified by the institutional lender.

Financial Arrangement Confirmed: Purchaser’s Responsibility
Prior to the purchase, it is the responsibility of the purchaser to arrange for closing funds and if purchase is to be financed to ensure all the mortgage financing is arranged. Once the purchaser has arranged mortgage financing documents, it is the responsibility of the purchaser to:

  1. Satisfy the requirements set forth by the lender including special requests. This includes submitting proof of income, source of down payment, and other miscellaneous debt obligations. These help avoid any last minute mortgage financing issues that may creep up.
  2. Confirm from the lender about dispatch of mortgage financing documents to our law office. We can then proceed to finalize mortgage financing and attain the required mortgage funds to close the deal.

Written Pre-Approval
If the buyer wishes to get a pre-approval, it is highly recommended that such an approval must be obtained in writing and should include all the relevant terms and conditions of the mortgage as well as the pre-approval.

In Case of Power of Attorney
All lenders do not allow use of power of attorney. If you wish to use a power of attorney please advise mortgage lender as soon as possible. Mortgage lenders require that a copy of the ‘Power of Attorney’ document (if any) be enclosed with mortgage documents. It is because this power of attorney must be pre-approved prior to being used. Generally, to get the power of attorney approved, the borrower must be a current customer of the bank. Or he must have signed the power of attorney Ontario with two witnesses and notarized by an Ontario lawyer.

Open/Closed Mortgages
Open mortgages can be paid off without any penalty amount during the term of mortgage. On the other hand, closed mortgages can only be paid according to the period and terms specified in the agreement. In closed mortgages, if you pay prior to the due maturity date, you will have to pay a penalty. This can be 3 months interest or interest rates value difference, whichever is greater.

Accelerated Payment Options
Many institutional lenders provide the option to pay off mortgage fast through weekly or bi-weekly payments. This can help reduce the burden of mortgage since payments are accelerated and a greater amount is being paid off in a small period of time. The total interest is lowered by accelerated payments.

CMHC – Canada Mortgage and Housing Corporation Mortgages
If the purchaser pays less than 20% of cash down payment, the lenders require a CMHC insured mortgage. Sometimes the lender deducts the cost of this insurance at the time of payment during closing. Hence, these costs can be confirmed. These costs can be confirmed from the lender itself. Such costs include provincial sales tax, appraisal cost. CMHC protects the lender against any mortgage default and it is charged to the purchaser with his mortgage payments.

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