Mortgage Financing

Greetings,

Following the last recent edition of this publication and in keeping with the legal nature of this column, I felt it might be timely to take a detailed look at the following subject:

Mortgage Financing

Whether purchasing a new home, a condominium or even a piece of land, all real estate transactions generally require the future owner to make a down payment of at least a portion of the purchase price implying that he must borrow the difference before moving ahead with the acquisition.

A promise to purchase typically contains a clause indicating that the sale is conditional on the approval of a mortgage within a specified period of time. Generally, this delay is about 10 days for a conventional mortgage (based on a 25 % deposit) and 15 to 20 days if the loan is to be insured by the CMHC or by GE Capital for exemple ( for down payments of 5 % to 24 % of the sale price).

More and more frequently, lending institutions such as the Caisses Populaires or certain banks – like the National Bank of Canada – transfer documents electronically and do much of their business with the acting notary over the Internet. Among other benefits, this allows the process to proceed much more quickly and facilitates the direct transfer of funds into the notary’s bank account.

Many other lenders have followed the trend and will likely offer similar services in the coming months. It has also become more common for “Legal Mortgage Instructions” to be sent by fax or e-mail.

Most lenders also offer the option of signing documents by the notary’s secretary , and in cases where the signature of a bank representative is required, the lender generally offers to sign the mortgage documents in any one of their branches.

Most of the time the lending institution requires a current land survey certificate. For properties located in the Laurentians, a water quality test and a letter indicating that the sanitary installations (septic tanks) are in conformity with municipal by-laws may also be necessary.

Finally, all well-advised buyers should be aware and informed with regard to the financing conditions and mortgage rates of various lenders. The competition for mortgages is fierce, and substantial savings can be made by those who know how to negotiate.

For additional information do not hesitate to communicate with me at (450) 227-7077 or at (514) 745-6673 (NORD) or at (514) 688-3131.

About the Author:
Me Michel Labrèche. This column was prepared by Mtre Michel Labrèche, notary, practising in Saint-Sauveur-des-Monts and Laval for the past twenty years. Me Labrèche is also the president of Domaine le Sanctuaire des Lacs. For more information please see www.monlac.com.