Subject Free Offers: Make Sure Your Financing is Solid

18.03.2016

One of our resident Mortgage Brokers – Tom Prasol of 4Front Mortgages – offers this advice for Buyers (and their Agents) looking to go in subject free in this busy, fats paced real estate market:

Subject free offers are increasingly needed to ensure you’re the successful bidder in today’s red hot Vancouver Real Estate market.  For many Buyers, this adds another level of stress and uncertainty in what can be an already stressful set of circumstances. While never an ideal situation, there are ways to mitigate the inherent risk of writing subject free offers. Here are a few tips that will help ensure a smooth offer:

Get Your Financial Documents In Order
Ensure you have provided your mortgage broker with your financial documents. These should include income verification such as tax returns, T4’s, and a letter of employment. This is particularly critical for self-employed or commission based Buyers as some people have write-offs or deductions that reduce the total amount of income that lenders will accept.
 
Strata Property Information
If a Buyer is purchasing in a strata property, a mortgage broker can find out if the building has been red-flagged for any building envelope or financial issues by mortgage insurers. This gives you comfort that the lender will not run into challenges with obtaining mortgage insurance, which is needed when the down-payment is generally less than 20%. Even when the down-payment exceeds 20%, lenders can access the mortgage insurer’s database to obtain strata information. Some lenders will require a Form B and Depreciation Report.  Having these reviewed by the mortgage broker in advance can ensure there are no challenges with the application process. 
 
Funds for the Deposit
Time and time again we see Buyers with great income and equity in their home but limited free cash to use for the deposit on a new purchase. With deposits now easily getting into the six figure range on detached homes, obtaining a line of credit or loan for such amounts can take time. Mortgage brokers can help by providing short-term bridge loans or lines of credits to be used in these situations.
 
Appraisals and Maximum Value
With multiple offer situations there is always a ceiling at which the purchase price can be justified via an appraisal. Appraisals are needed in most circumstances and are usually ordered after the purchase agreement has been completed. A mortgage broker can leverage their many appraiser contacts prior to an offer, for an opinion from the appraiser as to potential maximum value based on the MLS information. Appraisals can also be ordered in advance of the offer being made if the situation warrants it.
 
With some advance planning and preparation we can take the worry out of subject free offers and let you focus on securing your dream home. Please let me know if you have any questions about subject free offers or how to get the buying process started.

Contact Tom for more information, or to get your financing in order so you can be financially confident when looking for a new home.

Tom Prasol
Senior Mortgage Consultant
4Front Mortgages  | Mortgage Alliance

950 West Broadway, suite 105, Vancouver, BC, V5Z1K7

778-836-6883
[email protected]

www.4frontmortgages.com

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