This is when you write an offer to buy a property without any conditions. So there would be no financing condition, no property inspection and no subject removal period. Once accepted by the vendor ( the seller) it’s a done deal. Well at least in your mind and the sellers mind it’s a done deal. Unless you have the cash on hand don’t do this, and I’ll tell you why.
Yes I know that the real estate market across Canada is crazy right now. I was speaking with one of my local Realtors this week and he told me about a property in my subdivision that was listed for 349K, had 28 offers and ended up going for 646K. This was absolutely un heard of almost a year and a half ago.
That 60 second pre approval you have in your hand isn’t actually a pre approval. However unless they pulled your credit, reviewed your income and verified your down payment, it’s most likely a rate hold. That is great as fixed rates have been increasing lately but it does not allow you the put in a subject fee offer.
While it’s true that we have many sources of funding available to you in Canada these days. If you were thinking of going subject free and using 5% down payment, those sources have now shrunk to 3. This is because we only have 3 high ratio mortgage insurers in Canada, CMHC, Canada Guaranty and Sagen ( formally Genworth). Also a bad idea if you are putting 20% down or more as lenders will require an appraisal. Now what if that appraisal comes in less than your agreed upon price? If this happens you will have to make up the difference from your own pocket.
Lastly if you are putting in a sight unseen offer, as these have been happening. You could find out that the house has a cracked foundation, was a former grow op/meth lab, has a mold problem or is just plain non conforming. You may be perfectly suited to getting financing but that house is not.
For most people this is your single largest financial transaction in your lives. Don’t put yourself in jeopardy by presenting a subject free offer.
I look forward to hearing from you in regard to your mortgage needs.
p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).