Applying for a mortgage is a bold move in Canada in the recent times. The new rules and regulations introduced by the OSFI have left the real estate market, especially in the major cities of Ontario and British Columbia, almost crippled. It has become harder for applicants to score a mortgage as if the process was already not tricky enough. In order to reduce some of the pressure off ofprospective borrowers, we have compiled a three-step guide to help them navigate through the tricky process of getting a mortgage.
Do your homework
The first step to getting a mortgage is to have all your affairs in order. This covers a number of points including the borrower’s eligibility, affordability and preferences, and the property they are interested in.
When looking at different properties, there are two things that you should keep in mind apart from your own personal requirements for the house –the down payment required and the possible installments. You should have enough savings in the bank for you to put a down payment on the property, and some more. Also, you need to estimate how much money you are left with monthly after taking out all your fixed expenses and living costs. The amount you will be left with is what your monthly payments will come out of.
Run a personal ‘stress test’ to see if you are eligible for the new OSFI guidelines ahead of the actual process. Furthermore, you need to go through your credit history to see if you will appear to be a good risk for financial institutions or not. One way to improve your credit score is to pay off all pending loans, to increase your likelihood of getting a mortgage.
Visit a few banks, mortgage companies, trust companies, loan firms, and credit unions to get a pre-approval for your mortgage. The pre-approval process is basically an initial discussion with potential lenders about the rates and services they are offering, along with your eligibility and affordability after an evaluation of your assets and credit history. When going for a pre-approval interview, there are a number of documents you should have with you including your proof of employment, current pay slip, financial statements, and documents relevant to current loan payments, child support or other financial obligations.
Apply for the loan
Once you have everything clear including a property you like, your own finances, and a pre-approval from a good financial institution(s), all you have left to do is run a comparison and apply for the mortgage. Compare the rates being offered to you and select whichever is the lowest. Once you have taken your pick of the financial institution you want to enter into a deal with, you just have to gather your documentsand apply for the loan. You will hear from the lenders soon; as soon as you get the go signal,you need to put the down payment on the property before someone else snags it.