Getting Approved
Keep it Real!
It’s easy to make the mistake of borrowing too much, over committing yourself and ending up house-poor. You have to be really careful here, because the bank is more than happy to let you bite off more house than you can chew! Pre-approvals can be very deceiving since they often tell you the maximum you qualify for, not the maximum you can actually afford.
There are a lot of costs associated with owning a home and the last thing you want is to be cash strapped when something needs fixing or replacing.
Don’t Count Your Chickens
It’s also important to remember that a pre-approval really doesn’t ensure you will get approved for a mortgage. The amount your are pre-approved for simply means that “if” your credit checks out, and “if” your employment history is solid enough, and “if” your income is actually what you said it was (proven with documentation), “then” chances are good you will get approved.
The pre-approval does guarantee your rate though. Whilst some banks are eliminating their pre-approval business, there are plenty of non-bank lenders that are still doing it. Speak to your mortgage broker about this.
Leave No Stone Unturned
You have the right to shop around for the best mortgage available and there are over 60 lenders in Canada that are hoping to get your business. Don’t sell yourself short: Find a reliable and trustworthy mortgage broker and let them do the work of sourcing and negotiating the best deal available for you. You save time, you save money, and the lender pays your broker! It doesn’t get any better than that.
Your Down Payment – Size DOES Matter!
If you are buying a home, it ought to be your main goal to actually own 100% of it right? If not, re-evaluate! Your down payment is your first step in the home ownership process. The simple rule of thumb here is, put down as much as possible without leaving yourself unable to make your monthly bill payments or withstand some unexpected expenses. In Canada, if you put less than 20% down you must pay to insure the mortgage to protect the lender in case you default on your payments.
Giving Credit Where it’s Due
There are two main credit bureaus in Canada. They are Equifax and TransUnion and they are the lenders trusted resource for opinions on your credit worthiness. Your credit score is calculated using sophisticated algorithms that evaluate your financial responsibility based on five main categories.
The scoring system is weighted 35% based on your payment history, 30% on the amounts you owe, 15% on the length of time you have had credit, 10% on the type of credit you have, and 10% on new credit you may have.
Equifax and Transunion do not use the exact same calculation method and reporting errors can cause big problems for you so be sure to stay on top of your score and report with both agencies. The time you need credit is not the time you want to find out there is a problem, right?
For more discussion on this topic, see “How Your Credit Score Is Calculated“.
Shopping is Your Right, NOT a Privilege
There are more than 60 mortgage lenders in Canada. Only five of those are the major banks you see on television (TD, RBC, BMO, Scotia, and CIBC). What if one of the other 55+ have a mortgage product perfectly suited to your needs? How would you know? This is the reason why every Canadian should use a mortgage broker.
With a broker, one application can be used to negotiate with every lender in the country. Having said that, it’s important to find a broker you can trust and that may be easier said than done. The lenders often try to woo the brokers to send them your business using incentives (cash, etc.) so you need to be sure your broker is working for your best interests and not using your business to earn a free trip to Cuba!!
To get the best of both worlds, let our team refer you to a give Mortgages broker and police the process for you. You’ll receive all the InterestSUCKS education that there is, unparallelled service and the best mortgage rates in the country.
