Pre-Construction Mortgage Approval

Pre-Construction Mortgage Approval

Have you ever purchased a pre-construction home? If you have, then you know how the financing works, but if you are a first time home buyer and looking at purchasing a pre-construction property, then you will want to read this post about pre-construction mortgage approval.

pre-construction mortgage approval

It is common practice and policy by the builders to ask potential home buyers to get a pre-construction mortgage approval to make sure they can be qualified if they were to buy the property right now, even though pre-construction projects normally take over one year to finish.

So what do first time home buyers do? They go to their Mortgage Broker and ask him or her to qualify them on a pre-construction mortgage approval. This is no different than a regular pre-approval. In fact they’re one and the same.

When you have a pre-construction mortgage approval you are showing the builder that if the home was available to be moved in as of now your mortgage was approved and the builder would get paid.

The cautionary tale here is the fact that pre-construction mortgage approvals a.k.a. have a maximum life span of 120 days after which point they expire and there is no guarantee from the lender they will honor the rate hold or anything else on the mortgage approval.












What typically happens with pre-construction mortgage approvals is that the home buyer will return back to their Mortgage Broker no earlier than four months before the actual and final closing date of their property and apply again for an actual mortgage approval. Because this time around the pre-construction project will have been completed and be ready for transfer of ownership to the purchaser in no more than 120 days.

In this second time of applying for the mortgage the process can be more strenuous as you will need to provide a whole lot of documentation to the lender to satisfy all their conditions of approving your mortgage. Here is a list of items that the lender will ask the applicant to provide; this is just an example:

  • Updated mortgage application
  • New credit check, which the Mortgage Broker will do
  • Proof of income
  • Proof of down payment
  • Copy of the builders final and signed Agreement of Purchase and Sale including all schedules, waivers, amendments and any other documents that comes with the agreement
  • Proof that you have at least 1.5% of the purchase price in your personal accounts to cover closing related costs such as legal fee, appraisal fee …etc.

This is why we always recommend that you consult with your Mortgage Broker and work with her or him closely along the path towards your final closing date and home ownership. We recommend that you also work with a Lawyer and even consider asking a Realtor to go through the builder’s documents for you as they can catch certain things that you may not to be able to better negotiate with the price.

We’re here to answer your questions. Contact Us with any questions you have, or if you would like to start your pre-construction mortgage approval application process.

Cottage, Sunset, Lake

Mortgage for Cottage

Getting a Mortgage for Cottage Could be Within Your Reach

Do you have a dream cottage that you plan to own one day? You’ve probably been doing the whole cottage rental thing every summer, paying a weekly or daily cottage rental fee to go up North to that amazing spot by the lake with the family and friends. Many people feel that cottage ownership is out of reach and reality for them due to high cottage prices. But it doesn’t have to be that way.

mortgage for cottage

Mortgage for Cottage is attainable for more people than you think

Planning is key to buying any real estate, cottage property included. What better time than when you’re young and just started your career to put money aside on a monthly basis. For those families who already own a house and are starting to build equity on their property and paying down the mortgage, it can be an opportunity to use it for a down payment on the cottage.  There are so many different case scenarios that each one should be looked at on its own merits.

How does getting a Mortgage for Cottage work?

Like any other mortgage application for purchasing real estate the same process is involved with getting a mortgage for cottage. Best is to work with a Mortgage Broker or Mortgage Agent as they have specialized experience and skills with mortgages and have access to multiple lenders who would entertain your cottage mortgage application.

There are three main areas that you have to consider when applying for a mortgage for cottage:

(1) Income / Employment

Like any other loan application the lender needs to make sure you can afford to pay the monthly principal and interest payments on their loan / mortgage. Whether you are employed or self-employed it is possible to apply for a mortgage for cottage. You just need to be able to show proof of income and employment or self-employment through such things as pay stub, and employment letters for those who are employed, and business licenses, articles of incorporation, Government tax filings showing self-employed declared income for those who are self-employed.

(2) Down Payment

There is no such thing as a free mortgage. In Canada you need to have at least 5% of the purchase price from your own resources. Meaning you can’t borrow money from individuals (excluding immediate family), or companies, or a lender to pay for your down payment. You must be able to show that you have that money in your bank accounts or other investments. Many people don’t realize that there are still a few lenders out there who will entertain a mortgage for cottage application with as low as 5% down. Remember that the less down payment you provide the more income you will need since the total mortgage amount will be higher than if you had more down payment.

(3) Historically strong and healthy Credit

And the third main item that the lenders look at when someone applies for a mortgage is how strong and healthy their credit report is. There should be at least a two year history of credit activity in your credit report from Equifax and Transunion, who are the two main credit reporting agencies in Canada. Lenders don’t like to see late payments, credit collections, or bankruptcy’s in your report. This is not a good sign that you are able to pay back money you borrow.


Trusterra Mortgage is here to Help

We’re here to help from the start to the finish, working along your side until all is done. Have you been considering the idea of cottage ownership? Not sure if you could afford to buy a cottage property? With any questions you have don’t hesitate to Contact Us.  And its no cost to you; a win-win situation!

mortgage panic

Mortgage Panic

Having a Mortgage Panic incident?

mortgage panic

Well, don’t panic. There is a light at the end of the tunnel. As home prices in major cities across Canada increase they become less and less attainable by the average Canadian. Naturally this is a cause of concern, or shall we say a Mortgage Panic, as many first time home buyers could be pushed out of the market.

Sometimes a mortgage panic is justifiable and sometimes it isn’t. We’re here to help you figure out whether your mortgage panic attacks are rightly so or not. As well, we should keep in mind that maybe its just not your time to buy your first home, because if you do it could put you in a real mortgage panic as the mortgage payments start to pile up and put stress on the other parts of your financial responsibilities.

That’s why we always advise the consumer to first consult with a mortgage professional and have them analyze your financial health and strength. You can call it a personal financial stress test.

A common result of a mortgage panic is confusion

Confusion as to what steps to take first, then second and so on. When in a mortgage panic mode you can inadvertently create unduly high stress levels and further confusion as to what to do with the whole home buying process. Many times when we consult with our clients it becomes clear for them where they stand in the affordability chart and it provides them with a sound level of knowledge to make an informed decision as to whether to buy their first home or to wait a little longer.

If you are feeling the mortgage panic and the confusion coming we advise you to contact us so that we can consult with you, and bring things down to perspective, which will in turn calm you down allowing you to better assess your situation and make the right decisions.

At the end

You find out that there is in fact a light at the end of the tunnel and your mortgage panic will disappear allowing you to start working towards your home ownership goals and dreams. After the consultation and analysis of your financial health and reality we will advise you on what steps to take next. For example, it may be that you don’t have enough down payment, and all you have to do is to spend the next year saving more money. Or it may be that your credit score is poor. The goal here would be to accompany you and guide you on what to do to improve the health of your credit report and its score, known as the beacon score. It could even be a combination of several issues that need attention and nourishment.

So don’t be shy and reach out to us. We’re here to help!

Resources for Home Buyers and Sellers

Resources for Home Buyers and Sellers

The Canadian Real Estate Association of Canada (CREA), one of Canada’s largest single-industry trade Associations has recently updated and relaunched a web site full of resources for home buyers and sellers.

The CREA resources for home buyers and sellers site is catered for families, individuals, and investors who are looking to buy or sell real estate in Canada. The resources for home buyers and sellers site is full of helpful, educational, informative, and fun tools for everyone of all real estate investment backgrounds.

Resources for Home Buyers and Sellers

To wet your appetite here are some of things you will find on the the CREA resources for home buyers and sellers site:

1.) Assess Financial Readiness

Assess your present household budget and your annual income to determine if you are eligible for a mortgage and how much you can comfortably afford.

2.) Consider Mortgage Options

A mortgage is a loan, generally used to buy a property. How much you pay depends on how much you borrow (the principal), the loan’s interest rate, and how long you take to pay it back (the amortization period).

3.) Mortgage Default Insurance

When you buy a home with less than a 20% down payment, the mortgage needs to be insured against default. This type of insurance protects the mortgage lender in case you are not able to make your mortgage payments. It does not protect you.

4.) Research Government Programs

The federal government has assistance programs to help homebuyers. Research government program requirements to see if you are eligible.

5.) Finding a Home

Finding your perfect home can be a long process. Your REALTOR® will help identify the right type of home for you and continually research new listings in neighbourhoods that meet your needs.

6.) Making an Offer

After seeing many different homes, you have finally found one worthy of an offer! What are the next steps?

7.) Closing and Related Costs

Closing costs are the legal, administrative and disbursement fees associated with buying a home. Understanding these fees will help you budget more accurately. Remember these are additional costs over and above the price of the home.

Buy a condo or house

Buy a Condo or House

Both are good options; to buy a condo or house or semi-detached house or a townhouse. Each home buyer will have their own unique needs and requirements. Ultimately a first time home buyer should do her or his homework allowing them to make an educated and well informed decision on whether to buy a condo or a house.

buy condo or housebuy condo or house



Here are just a few of many factors that a first time home buyer should consider when weighing their options on whether to buy a condo or house.

1) Are you set on where you want to live? i.e. urban or suburban, down town or up town, close to your work or don’t mind driving long distance … you get the picture.

2) If you are set on where you want to live, what are the options available at your disposal based on your income, credit strength and down payment? i.e. maybe there is a nice house in the urban area you like to live, but can you get approved for a mortgage and would the monthly mortgage payments be comfortable for you to pay without putting too much stress on the rest of your monthly expenses.

3) If you know what is the maximum amount of a mortgage you can get approved for, what is within your practical reach; a condo or a house? i.e. sometimes first time home buyers first home will be a condo, and then, for example, when their mortgage is up for renewal five years later, they are ready to move into a house.

4) If none of the above is an issue, and financing is not a problem, then a suggestion would be to consider buying a detached home. You will have the most flexibility and freedom. No condo fee’s to pay, and you will have such benefits as having your own front and back yard, private parking, potentially less noise since there are no neighbours directly attached to your property and more.

5) Should you be someone who likes to travel a lot then a condo might be a better option as it is much easier, and most of the time safer, to just lock the doors and go away on holidays or even longer without worrying about whose looking after your home.

6) Living in a house has some work cut out for you as you have to cut the grass, shovel the snow, water the plants, maintain the outside of the property as it gets older, and other related matters. And if you decide to hire someone to do this work for you, it can become a large one time or monthly expense. Living in a condo you have to pay a condo maintenance fee, but you don’t worry about cutting the grass, shoveling the snow, and maintaining the wear and tear of the outside structure of the building. Plus, the majority of the condominiums will have around the clock security personal look after the premises.

Why rent when you can own

Why rent when you can own?

First Time Home Buyers why rent when you can own your home! Switch from paying rent, to making monthly mortgage payments that’s going towards your property instead of someone else’s.

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What is cohabitation agreement

Have you ever asked yourself what is cohabitation agreement?

Are you planning to buy a property with your girlfriend or boyfriend?

Before moving in together, couples should consider property rights.

Sarah Millar, from the Toronto Star has a great article that explains in detail about cohabitation agreements.

It is worth your while to read further down and check out the informative article about what is cohabitation agreement.

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couples moving in together what is cohabitation agreement

First Time Home Buyers Will You Buy your Home in 2014

First Time Home Buyers Will You Buy Your Home In 2014

Another year is behind you and its time to set goals for the new year. We want to hear from you; first time home buyers will you buy your home in 2014? Will this be the year when you will STOP paying rent or someone else’s mortgage?

Mortgage interest rates are at all time lows and if they even do move upwards, it won’t be by a whole lot. This could be your year!

Some things that you can start doing now for when the time comes:

1) Build up your down payment money.Traditionally lenders like to see that you have had your money in your own bank accounts for 3 months. Some lenders even allow you to receive gifted money from your immediate family members.

2) In addition to having enough money to put down for a mortgage, you should always calculate that what ever will be the purchase price of the home you want to buy you should have an additional 1.5% of that purchase price in your accounts. This is to make sure you have enough money to pay for your closing related costs, such as legal fee’s, inspection fee, appraisal fee, tax’s, …etc.

3) Make sure your Canadian credit score is healthy and strong. Best way to do that is to perform your own credit check. It will cost you about $30, but it’s money well spent. You will see exactly what has been your credit activity almost up to the date that you checked it. We’ve even seen cases of fraud or clients who had paid all their debts back but the lending institution had forgotten to report that to the credit bureau’s Equifax and Transunion.  If you do notice any discrepancy’s or fraud you will have time to fix it and get your credit all sorted out.

We’d like to hear from you. Leave your thoughts or questions below in the comments section. Or if you have any questions that you wish to talk to us in private with send us a private message by way of our Contact Us page and we would be happy to talk with you.


first time home buyers will you buy in 2014

Helping Realtors Close more Deals

Real Estate agents and brokers work hard for their clients when it comes to selling or buying properties for them. That is why at Trusterra Mortgage we do our best in helping Realtors close deals. We work with Real Estate Agents and Brokers every step of their clients way towards buying or selling their homes.

Helping Realtors close more deals means that we provide mortgage options for their clients to make an informed decision about which mortgage product to get. Not only that, we make sure the client is at a right time in their lives to be able to afford to buy a home and pay for its mortgage. Helping Realtors close more deals sometimes means that their clients first need to get a mortgage pre-approval so they know exactly how much of a house they can afford to buy. Helping Realtors Close More Deals

By helping Realtors close deals even implies that when selling a home they can let the other real estate agent, the buying agent, know that they have a trustable and honest source for mortgage financing that can help their clients buy the house.

If you are a Real Estate agent in Canada and are reading this article, contact us to see how we can help you close more deals and have a satisfied customer who will for sure refer more of his or her family and friends to you.

Mortgage Happy

Are you a Mortgage Happy person?

Are you a mortgage happy person or not a mortgage happy person?  We want to hear about what was your good and bad experiences when going through the mortgage application process when you were buying a home whether as a first time home buyer or an existing home owner.

Share with us and the world why you are a happy person, or not when it comes to the mortgage application process.

If you were to go through the mortgage application process what changes do you want to see in the mortgage industry, what can be improved on?

people that are mortgage happy