The rules of successful financing

When it comes to taking out a mortgage, choosing the financing and the lender are decisions that deserve thought. Here's how the Real Estate Brokerage Act protects you if you use the services of real estate brokerage professionals duly authorized by the OACIQ.

When making the promise to purchase

Have you found the property that suits you with the help of a real estate broker? When making an offer to the seller, your broker will use the form called Promise to Purchase . This form sets out, among other things, your responsibilities as a buyer with regard to mortgage financing, if applicable.

First of all, one of the clauses of the Promise to Purchase provides that you must undertake to undertake in good faith, as soon as possible and at your own expense, all necessary steps to obtain a loan secured by mortgage.

In this form, the broker will have to clearly specify with you all the elements of the financing scenario that you are looking for, namely: the amount of the loan, the interest rate not to be exceeded, the amortization period, the term required by the buyer and the period of time you are given to provide a copy of the mortgage lender's commitment to the seller. Generally, this period should be at least 14 days. Note that a mortgage pre-approval is not suitable in this context.

In the case of a promise to purchase concerning a joint ownership, the broker must also specify the name of the financial institution to which the financing request must be made.

So much for context. You now have the choice of lender. This could be: a fund; a bank, or a private lender.

Your broker can put you in touch with a mortgage broker to find a mortgage loan that matches the terms of your promise to purchase. He or she could also direct you to a specific lender. But be aware that under his or her code of ethics, your broker must disclose to you in writing any financial interest related to such a referral.

Good to know

• Any amount paid to the broker, as an advance of remuneration or disbursement, will be deposited without delay in the broker's or agency's general trust account. It may only be withdrawn when the services have been rendered or the disbursements have been incurred, and these amounts have been invoiced and transmitted to the borrower or accepted by the latter.

• Like any document forming an integral part of your potential promise to purchase, the Seller's Declarations on the Property form and all related documents must be sent to the mortgage lender so that they can determine, with full knowledge of the facts, the terms of the loan that they may grant you.

• Unless otherwise stated in the contract, the contract will expire 30 days after its conclusion.

For more information , you can read the following article:

• Promise to purchase and financing a building - The importance of the section relating to the new mortgage loan

Good transaction!

For any questions, do not hesitate to contact the Info OACIQ information center.

What about mortgage pre-authorization?

Although optional, pre-authorization allows you to know your purchasing power, guarantee a rate and prove your seriousness as a buyer. When the time comes to buy, you will still have to obtain final approval of the mortgage loan, according to the terms set out in your promise to purchase.

Last updated: June 26, 2020

Item number: 204106