LOAN APPROVAL PROCESS

Step 1 - Application Process

Your ecMORTGAGE broker will meet with you to discuss your mortgage needs, take an application, review your credit bureau with you, examine your income documentation, and calculate your debt ratios to determine how much mortgage you can qualify for. This process typically takes about one hour and is much more thorough than any bank pre-approval.

Once you have been pre-qualified by your ecMORTGAGE broker, you are ready to go home shopping. Or, if you are refinancing, your broker will be able to submit your application.

Bank Lenders Alternative or Private Lenders

Sufficient Employment?
Lenders like to see at least 6 months employment with the same employer. You must be past your probationary Period.

Insufficient Employment?
If your job is seasonal or if you are recently self-employed, our alternative lenders might be able to help you out.

Sufficient Income?
Is your income consistant? We can use income from full time jobs, pensions, long-term disability, child support, alimony, child tax credits, and part-time income & self-employment income that appears on Line 150 of your Revenue Canada Notice Of Assessments if you have been in that role for at least 2 years.

You will need to provide your mortgage broker with copies of the income documentation.

Insufficient Income?
If you cannot prove your income through paystubs, employment letters, and/or income tax returns, our alternative lenders have special programs where they will use a variety of sources of income to prove you are in business and are generating an income.

Sufficient Credit?
Do you have at least 2 pieces of credit worth at least $2,500? Have they been open for at least 1 year? Have they all been paid on time? Are your balances below their credit limits?

Your ecMORTGAGE broker will review your credit report to make sure the information reporting on your bureau is accurate. It is common for information on credit bureaus to be out of date, missing, or reporting balances on accounts that have been paid off.

Insufficient Credit?
If you have had credit problems like recent late payments, collections, judgements, bankruptcy or consumer proposal, our alternative lenders may be able to help you get back on your feet within a few years.

If your property is in foreclosure, we have Private Lenders that may be able to help you save your home.

Sufficient Equity or Down Payment?
If you are Purchasing a home, your down payments can come from your savings, RSPs, sale of your current home, or a gift from an immediate family member. You will need at least 5% down + about 3% to cover all your closing costs. If you do not have enough money to cover all of this, ask about our $0 Down Payment program!

If you are refinancing, you will need a minimum of 20% of your home’s value in equity.

Insufficient Equity or Down Payment?
While alternative lenders will overlook employment, income, and credit issues, they are very conservative on the amount of money that they will lend on a property. The will typically only lend up to 85% on a purchase and only up to 80% on a refinance, depending on your specific situation.

Private Lenders will finance nearly anybody if they are only financing up to about 70% of the value of your home.

Sufficient Property?
If you are buying a house, modular home, mobile/mini home, or a condo in a “normal” residential area with 4 or less units, you should be fine unless the house has structural issues. There are different rules for mobile homes on rented land. If the property is too rural, has large acreage, or if it does not have year-round access, you may find it difficult to arrange financing. Some of our lenders may be able to help you out with these unusual properties.

Insufficient Property?
Alternative lenders prefer to do mortgages on houses in or near major residential areas. They will not lend on rural properties or mini homes on rented land. The house must be in good condition. An appraisal will be required.

Private Lenders are a little more flexible, but would want at least part of the mortgage funds to go towards any necessary home repairs. Private Lenders are also a bit more flexible on the location of the property.


Step 2 - Lender Response

It usually takes 2-3 business days for the lenders to respond to your mortgage application. In most cases, your application will be approved if you have met all of the above requirements. However, sometimes lenders look at other credit bureaus or check their own account histories and may find something negative that we were unaware of.

Mortgage Approval Issued Mortgage Decline Issued

When a bank approves your mortgage application, they will issue a Conditional Mortgage Commitment. We will need to meet with you to review and sign the Commitment and other Disclosure Documentation. The Commitment will detail all of the terms and conditions/documentation that the bank requires you to provide. If you are buying a home, you typically only have 5-10 business days to get your financing arranged. That is why it is important to meet with a ecMORTGAGE broker before you make an offer on a house.

All banks and mortgage lenders have their own rules. It is not uncommon to get declined with one bank but be approved with another. If we are unable to get an approval with any banks, there may be a way to enhance the application such as a co-signor, a larger down payment, consolidating other debts, or waiting for your credit score to improve. If none of these work to obtain an approval, we may have to use an Alternative or Private Lender.


Step 3 - Fulfilling Conditions

We will need to provide the bank with all the requested documentation ASAP. The banks typically require that they recieve all the required documentation at least 10 business days prior to closing the mortgage. You can find a detailed list of standard documentation in our Library. There may be other documentation required specific to your situation.

Unable to Fulfill Conditions?
If you cannot meet all of the lender’s approval conditions, another lender may not have the same requirements. Having access to multiple lenders makes it simpler for you to obtain an approval and is one of the benefits of using a ecMORTGAGE broker. If none of our bank lenders can help, we may have to use an Alternative or Private Lender.


Step 4 - File Complete

Once you have provided all of the required documentation, the lender will issue a “file complete” notification. However, the lenders have the right to check your credit and/or verify your employment closer to the closing date. Therefore it is important to keep your credit in good shape and not open any new credit which would affect your credit score and your debt ratios. If you want to change jobs before closing the mortgage, it is important to have a discussion with your ecMORTGAGE broker first.


Step 5 - Closing Process

Once you have met all of the conditions in the Mortgage Approval, the lender will send Mortgage Instructions and the Mortgage Funds directly to your lawyer. If you are purchasing a home, you will need to bring your down payment to your lawyer. Then, your lawyer will have enough funds to pay for the house. If you are refinancing, the lawyer will use the mortgage funds to pay off your current mortgage and any other debts you might be consolidating and/or write you a cheque for any equity you cashed out.

On Closing Day, you will need to go to your lawyer’s office to sign the new mortgage documents, provide proof of your ID and house/fire insurance, and pay your lawyer for any Closing Costs.


Step 6 - Post Closing Process

This is one of the main ways we are different from your bank. Banks have to report to their shareholders. Therefore, the banks’ job is to make as much money from you as possible so they can report their billions of dollars in profits quarterly. Our job, on the other hand, is to help you find ways to save you as much as possible! After your mortgage closes, your ecMORTGAGE broker will help you manage your mortgage over the term to find ways to help you reduce your interest charges. You can find several ways to reduce interest charges by downloading a free copy of the Paying Off Your Mortgage Faster booklet. We will contact you annually to do a “mortgage check up” to discuss your pre-payment privileges with you and implement the ones that are affordable for you. Our Mortgage Management software will also monitor your mortgage for interest savings opportunities. In other words, we can help relieve some of the worry you may have about your mortgage while helping you make smart financial decisions.