When do i put the down payment ?

[Seesus]

I have signed up for a pre-cons condo which is due for interim occupancy in Dec.2012 (might get delayed a little), and have been paying parts of the payment as per the agreement of sale over the last year until now. I am planning on putting down some down payment at the time when i have to pay my last installment (or say at the time of closing) but wont have money released up until Mar.2013 from my GICs.

I am curious to know when do i have to actually put the extra down payment. Would it be before or after the interim occupancy ? as i understand the mortgage doesn't kick in until the interim occupancy is completed. I am attempting to guage if i will enough room between closing around dec.2012 and the funds release in mar.2013 to reflect the accurate down payment on my final mortgage amount to keep it low.

I am quite new to real estate and would request to excuse if this sounds stupid to pros, but i have to ask as i am not aware

 

[Catapult]

You won't get your mortage until you close on your property after the interim occupancy period. If you don't have the funds to pay the extra downpayment at that time, typical mortgages allow you to pay down a portion of the principal amount owed each year (mine allows for 20% prepayment per year). This however will not lower your monthly payments but will significantly shorten the term of the mortgage and the amount of interest that you end up paying in total. If you want to reduce your monthly payments, you might want to look into getting a short term secured loan by pledging your GICs. You should be able to get a great interest rate because GICs are guaranteed (no risk to the lender). You would then have the extra funds when you close on your property. Your mortgage broker or bank should be able to provide advice.

Edit: If your interim occupancy starts Dec 2012 and your GICs mature Mar 2013 ,I wouldn't be surprised if you don't close until after the GICs mature. My last condo was in occupany for more than 4 months. So you may be ok.

 

[jasjasika]

Depending on your credit rating, a mortgage institution will advise you as to how much you can borrow and the interest rate they will charge you. Most lending institutions appreciate the customer who has been prequalified. I have done this but see very little usefulness in it unless you plan to buy very shortly,The lending institution will check your credit history and employment before the qualification. The better your credit history, salary and the lesser your current debt (like credit cards and instalment loan), the more apt they are to pre-approve a loan. Of course you are under no obligation to give that lending institution control of your mortgage until the papers are signed.Now about down payment. There are several schools of thought on this subject. My theory is the more down payment, the lower your monthly mortgage payments. Most lending institutions have requirements in this area. Some, as low as 3% and some as high as 20%. The same lender can require different percentages depending on your credit history, the amount of loan needed and the value of the prospective property.