For the majority of mortgages in Canada, there are a set number of steps that are followed:
1. Initial Conversation
2. Application Submission
3. Lender Underwriting
4. Conditional Commitment
Initial Conversation – The processes is started when you speak with a mortgage professional about your mortgage request. Items discussed usually include your current employment and credit status, the requested loan amount, and any other items that may lead to a rejection of the mortgage request. The mortgage professional should outline the rest of the steps involved in the mortgage process. If you want to proceed they will also send a mortgage application form and a list of supporting documents.
Application Submission – The mortgage professional will review the application and documents for any errors and will typically pull a credit report. They will identify a few lenders that best fit the borrower’s requirements. In most cases they are able to give an idea of what rates, fees, and terms to expect.
Lender Underwriting – Once the borrower decides to proceed with a specific lender the lender begins their underwriting process. There is usually a delay of 24-48 hours before it is reviewed by an underwriter. The lender’s underwriters will ensure that the request meets all guidelines. These guidelines usually include income, credit, down payment/home equity, and the subject property. In most cases weakness in one factor may be offset by strength in another factor.
Conditional Commitment – All mortgage request details and documents are sent to the selected lenders so that they can provide a conditional commitment. This conditional commitment will better outline the terms and costs. These are usually conditional upon legal approval and confirmation of all submitted documents and details.
Closing – The borrower’s and lender’s lawyers work together to register the mortgage charge on the property. For purchases, the lawyers will also transfer the title of the property to the borrower. The borrower will need to meet with their laywer to sign the final papers. On the day of funding the lender sends funds to the borrower’s laywer’s trust account and the borrower’s lawyer will distribute all funds. The lawyers will register the mortgage charge, and for purchases, will change the title of the property to the new owner.