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The purchasing process consists of six main steps:

1. YOUR TEAM.

MORTGAGE BROKER

The main role of a Mortgage Broker is to find the lending institution with the best rates and terms to suit your needs. They will meet you in your home or at a location convenient to you. Most important of all - they specialize in mortgages and keep up with changes in real estate law and in the many products offered by the lending institutions. Mortgage Brokers are professionals with extensive training in the field of mortgage lending. In most provinces, brokers have to pass exams (e.g. in British Columbia the exams are set by the University of British Columbia) before they use the title ‘Mortgage Broker’ or ‘Mortgage Consultant’.

THE REALTOR

The Realtor will know what properties are on the market, in which neighbourhoods, and at what prices. Realtors are aware of current market conditions and what prices are realistic. They assist in making an Offer to Purchase, and can advise you regarding what conditions you should include in any offers.

THE HOME INSPECTOR / THE BUILDING INSPECTOR

A professional inspector will provide a detailed written report on the present condition of the building and indicate whether any repairs are necessary and their approximate cost. Your Realtor can usually help you find a good inspector.

THE LAWYER OR NOTARY

Your Lawyer ensures that your legal interests are protected when you buy a property. Your Lawyer will review any contracts involved in buying, such as the Offer to Purchase and the mortgage document, your Lawyer will be responsible for many of the closing arrangements.

THE INSURANCE BROKER

An Insurance Broker can provide you with the necessary insurance, including house insurance and mortgage life insurance.

2. A PRE-APPROVED MORTGAGE.

It is a good idea to meet with your Mortgage Broker before going house-hunting. They will calculate the price range of properties you can consider. The application will also give you an interest rate guarantee to protect you against increases in mortgage rates for 60 to 120 days. Your Mortgage Broker will then need to know, fairly accurately, the following information:

	Your gross annual income (net income in the case of a self-employed individual)
	How much money you have for your down payment
	Your assets and liabilities
	All monthly payments that you are required to make

It is best to provide your Mortgage Broker with all necessary documents at the pre-approval stage, particularly proof of income and down payment. Your Mortgage Broker will then ask your permission to perform a credit bureau enquiry at this time. Your Mortgage Broker will then calculate the amount of the mortgage for which you qualify. Together with your down payment, you will then have an accurate idea as to the maximum amount that you can spend on a house. Even though you have been pre-approved for a mortgage you should still have a ‘subject to financing’ clause in your Contract of Purchase and Sale. The value of the property you wish to buy is part of the final approval process, and an appraisal may be necessary. Mortgage applications may be declined because lending institutions are not willing to mortgage properties, even though the applicants are well-qualified.

3. OFFER TO PURCHASE A PROPERTY.

Realtors have access to a wide range of available properties and can advise you of the current sale prices of comparable houses. Realtors will arrange appointments for you to view homes and find out for you what items are included in the sale price. The Realtor will help you negotiate with the vendor. Your offer (purchase agreement) should include:

	a description of the property - civic address and legal description
	the price you are offering to pay
	the amount of your initial deposit, and when it is to be paid. The deposit is part of your down payment and is to indicate your 'good faith' when signing the contract.
	the date you wish to pay for the property (the 'completion date' or 'closing date')
	the date you wish to move into it (the 'possession date')
	the date the buyer assumes responsibility for property taxes, rates, utilities etc... (the 'adjustment date')
	what your offer includes in the price (e.g. appliances)
	various 'subjects' or conditions to your offer, and the dates by which they are to be removed - for example:

· subject to the purchaser obtaining a mortgage in the amount of $..... by...(date)'

· subject to the purchaser obtaining a building inspection by...(date)'

· subject to the sale of your present residence by...(date)'

· subject to your lawyer's approval by...(date)'

· the time limit your offer is open to acceptance

Your Realtor will then present it to the vendor's Realtor for their consideration. Once both purchaser and vendor agree to all terms and conditions and the Contract of Purchase and Sale has been signed, dated, and witnessed, you have an accepted offer and are in a binding contract, subject only to the conditions being satisfied.

4. COMPLETE THE DEAL.

Once you have an accepted offer on the property you wish to buy, you will need to give some information to your Mortgage Broker. Either you (or your Realtor) will provide a copy of the Purchase Agreement and it would also help if you could provide a copy of the listing, showing the legal description, property taxes, tax roll number, lot size, and zoning.

Your Mortgage Broker will ensure all the necessary documents, such as employment verification and proof of down payment have been provided. The Mortgage Broker and purchaser will then confirm the following - the exact mortgage amount, the interest rate, the term, the payment frequency.

Your Mortgage Broker may need to order an appraisal and survey.

The Realtor will be overseeing any other conditions that need to be satisfied. For example, a building inspection may be required and the Realtor will arrange for the inspector to view the property.

What if the building inspector locates a problem? Your Realtor will discuss the next step with you. There are various solutions, depending on the problem.

	You could decide that the problem is minor and accept the property as is.
	You could try to negotiate a reduction in purchase price.
	The vendors could fix the problem to your satisfaction.
	You could refuse to remove the 'subject to...' and walk away from the deal.

5. REMOVE SUBJECTS.

Once all conditions have been satisfied, your Realtor will meet with you to sign another form to remove 'the subjects'. You now have a binding contract and non-completion can result in serious legal consequences.

6. LAWYER'S OFFICE.

Mortgage instructions will be sent to your Lawyer from the lending institution. These instructions consist of the mortgage and property details. Your Realtor will have sent your Lawyer a copy of the purchase agreement and confirmation that your deposit has been paid.

Your Lawyer will then do the appropriate searches to determine what charges are listed against the property (e.g. the vendor’s mortgage). These must be satisfied by the vendor before title can be transferred to you.

Approximately one week before your closing date, you meet with your Lawyer. They will explain the mortgage documents to you and witness you signing them. Your Lawyer will request a copy of your fire insurance on the new property, with loss payable to the lender.

Your Lawyer will explain the statement of adjustments and disbursements. This statement lists the various expenditures and where the money is coming from to pay for them.

For example:

	The contract amount of the purchase
	Less the amount of deposit you gave the Realtor
	Less the amount of your mortgage forwarded by the lending institution to your lawyer
	Add the amount of the down payment you still owe
	Add the portion of property taxes you owe the vendor OR
	Subtract the portion of property taxes that the vendor owes to you
	Add or subtract any other adjustments that are required (e.g. land or property transfer tax)
	Add the lawyer's fees

The balance is the amount that you will have to pay to the lawyer 'in trust' to complete the transaction. Most lawyers will require a bank draft or certified cheque

On the completion date your Lawyer will forward the total amount required to the vendor's lawyer 'in trust' on the vendor's lawyer's undertaking to provide clear title to you. Once the vendor’s lawyer has received the money, your Realtor will be given the go-ahead to hand you the keys.