If you're looking to buy a home in Canada, you'll likely need a mortgage to finance the purchase. Getting approved for a mortgage can be a complex process, but following these five steps can help increase your chances of getting approved.
Check your credit score: Your credit score plays a significant role in determining whether you're approved for a mortgage and what interest rate you're offered. In Canada, credit scores range from 300 to 900, with higher scores indicating better creditworthiness. Check your credit score and report for any errors or inaccuracies that need to be addressed before applying for a mortgage.
Determine your budget: Before applying for a mortgage, it's important to determine how much you can afford to spend on a home. This will depend on your income, expenses, and other financial obligations. Use a mortgage affordability calculator to estimate what you can afford, and factor in additional expenses like property taxes, insurance, and maintenance costs.
Gather your documents: To apply for a mortgage, you'll need to provide documentation like proof of income, employment history, bank statements, and tax returns. Gather these documents ahead of time to streamline the application process.
Shop around for a mortgage: Don't just settle for the first mortgage offer you receive. Shop around and compare different lenders and mortgage products to find the best deal for your financial situation. Consider factors like interest rates, repayment terms, and any associated fees or penalties.
Get pre-approved: Getting pre-approved for a mortgage can give you an advantage in the home buying process. This involves submitting a mortgage application and providing supporting documentation to a lender, who will then provide a pre-approval letter stating how much you're approved to borrow. This can make you a more attractive buyer to sellers and can help you avoid any surprises later in the home buying process.