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Qualifying for a mortgage

Mortgages & Costs. What to expect when you purchase a home.

How much can you afford?:

That depends on factors such as income, down payment, interest rate & personal debt. CMHC has developed a mortgage tool to help determine how much you can afford. For more information Click here.

Pre-approval vs. Pre-qualification:

What could be more comforting than the peace of mind that goes with knowing your mortgage is fully approved before your start your home search? When applying for financing you will need to furnish information on income, expenses & obligations. It will save time having the following available:

Two most recent pay stubs
T4's for the past two years
Income Tax returns for the past 2 years
Last two month's bank statements
Long-term debt information

You will have greatly improved your negotiating position when your are pre-approaved for a mortgage. Sellers are more apt to negotiate with someone who already has a mortgage approval in hand. The pre-approval letter lets the seller know they are working with a serious buyer. A pre-approved buyer can also close on a property more quickly, another major consideration for a motivated seller. Obtaining a pre-approved mortgage is essential during a "seller's market" or in neighourhoods where supply is limited.

Pre-approval uses basic information as well as electronic credit reporting.

Pre-approval is a true mortgage commitment to financing your home.

Pre-approval is an indication of the total mortgage available to you.

Pre-approval is based on proof of current employment.

Pre-approval is based on proof of current income.

Pre-approval is based on proof of current financial commitments.

Pre-qualification is NOT a mortgage approval.

Pre-qualification is NOT based on your credit file.

Pre-qualification is an estimate of affordability based on unsubstantiated income.

Pre-qualification is based on unsubstantiated financial information you give.

Pre-qualification does not guarantee the purchase of your new home.

Pre-approval puts you one step ahead of your competition and shows all parties that you are a serious buyer.

Estimated Closing Costs in the Toronto Area

The total cost of buying a home involves not only the price of the property, but also costs called Closing Costs that must be paid upon closing the transaction. These expenses, are necessary to complete the purchase but are outside the purchase price for the property and will vary for each property. These figures are estimated and are dependant on your own unique situation. If Title Insurance is purchased, your closing costs will generally be reduced. HST has not been included.

-Common Legal Fee: $700-$2000

-Survey (Freehold only), if not provided for in agreement: $500-$1500

-Status Certificate (Condominium only): $100-$150

-Land Transfer Tax: Payable to the Province of Ontario & in the 416, the City of Toronto-See Land Transfer Tax page.

-Real Estate Fee (paid by Sellers only): 5%-6% of selling price PLUS HST

-Building & Zoning Report: $60-$100

-Tax Certificate: $30-$50

-Gas Report (if required): $15

-Water Report (if required): $15

-Hydro Report (if required): $15

-Register Deed: $50

-Register Mortgage: $50

-Execution Certificate: $90

-Title Search: $75

-Photocopies, faxes & postage: $20

-Miscellaneous: $40

-CMHC Insurance: If your downpayment is less than 20%. Fee ranges from 0.5%-2.5% of mortgage amount plus HST.

-Property Tax Adjustment: Only if Seller has prepaid property taxes.

-Security Deposit: Some utility companies may require up to $250 each.

-Suggested Cash on hand: $5,000 minimum