What Are Your Mortgage Options?

Portable		In some cases, your bank will allow you to transfer a mortgage from your existing home to your new home should the need arise. You may take advantage of this option to: later avoid a mortgage discharge penalty. keep an existing mortgage rate that is beneficial to you.
Blended		When you take an existing mortgage rate and average it with a new rate.
Conventional		When the amount of your mortgage is less that 75% of the value of the property you are purchasing (e.g., your down payment is at least 25% of the purchase price).
High Ratio		When you borrow more than 75% of the value of the property, your must insure your mortgage through the Canada Mortgage and Housing Corporation (CMHC) and G.E. Capital. You pay an insurance fee that is up to 2.75% of the value of the mortgage; this fee is paid to the lending institution to guarantee its loan. Note: the insurance fee can be added to the value of the mortgage so it does not form part of your closing costs. See What is a High-Ratio Mortgage? for more information.

Financing Your Property

Common methods of financing the purchase of a property include:

• cash alone
• cash and transfer of an existing mortgage
• cash and a new conventional mortgage
• cash and a seller take-back mortgage
• cash and a combination of a conventional mortgage and a seller take-back mortgage
• cash and a high-ratio mortgage

Whenever a mortgage is involved in the financing process, several steps are required:

• completion of the loan application by the lending institution (an application fee may be required)
• the lending institution processes and reviews the application based on information the borrower provides
• The lending institution requires:
  
  1. an appraisal of the home
  2. a credit Report on the borrower.
  3. verification of net worth (assets and liabilities) of the borrower.
  4. verification of down payment.
  5. verification of the income of the borrower.
• once the loan is approved, the lending institution issues a "mortgage commitment" for the borrower's signature.
• upon closing, the lending institution disburses funds to the buyer's and seller's lawyers for disbursement.
• the buyer's lawyer will register the loan documents on title.