Real estate loan: what rate should you...
You've found your dream house, and all you have to do now is take out a housing loan with your bank....
Before going ahead, it is essential that you make an appointment with your bank to determine the amount you may borrow. This depends on your repayment capacity, your own funds, or any other guarantee you can provide. Your loan officer will help you with the financing plan and determine the maximum amount you can borrow and as a result, the maximum price you can pay for the new real estate.
The price of your dream house falls easily within your financing plan, thus so far so good! Now, you just need to commit to purchasing the property by signing a sale agreement with the current owner or the real estate agent. The sale agreement is generally valid for 30 days, and where a loan is required, it can be highly useful to include a suspensive condition allowing you to cancel the agreement if your loan application gets refused by the bank.
Your home loan advisor will help you calculate the total amount that you need to borrow. This includes the price of the property and an estimation of associated charges, such as notary fees, renovation costs, and, depending on your situation, the cost of residual debt insurance, which will provide you with coverage in the event of death. On top, there are fixes charges such as the bank’s application fee and any possible mortgage establishment costs. The final borrowed amount corresponds to the difference between your own equity and the total cost of the acquisition.
For the actual application, you must gather together a certain number of documents, namely the sale agreement, your salary certificates and/or the last three pay slips, estimates for any renovations, and proof of your own contribution. Once you have given these documents to the bank, you will receive a definitive loan offer that sums up all the essential information, such as the amount, the rate, the types of insurance chosen, etc.
Once these formalities have been settled with the bank, you just need to sign the deed of sale for the property. The only thing left to do then, is to pack up your things and move in!
If you have any questions or require more detailed information, BCEE experts are at your service! You may also consult our practical guide to home loans, written specifically to answer your questions, or use our loan simulator to obtain an idea of your future loan.