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How to get pre-approved for a mortgage in Canada



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Welcome to Homebuyer's School

brought to you by Brookfield Residential

So hi everyone, and welcome to another edition of Homebuyer's School.

Today I'm joined by Mujtaba Syed,

Mobile Mortgage Specialist with TD Canada Trust, and today the question

we're gonna answer is, "How to get pre-approved for a mortgage in Canada."

So Mo, how do we get pre-approved for a mortgage?

Karl the best way to get pre-approved for a mortgage is to reach out to your bank,

to your mortgage broker, book an appointment with them and

kind of sit in, and just work your numbers, work the application

to see what your pre-qualifications are.

Any bank?

Any bank that you're comfortable with. Someone that you have a

relationship would be ideal. Someone that kind understands where you're coming from.

So how do I apply for a mortgage in Canada?

The best way to apply for a mortgage

is to book the appointment with the mortgage specialist, someone who

specializes in mortgages. Sit down with them, have the appointment. It should be a

fairly decent deployment, should be very lengthy shouldn't be less than an hour

to go over all your needs. You should be able to bring in your documents with you

that includes any income documents, anything that you think you might need

for mortgage pre-approval. The specialist at that time could even advise you what

you need prior to the appointment so you know you're not missing anything.

Can you break down some of the steps for pre-approval?

Yeah, absolutely.

The first step we definitely do is we actually look at your credit. Credit's a big

part of getting pre-approved for a mortgage. It kind of gives a bank an idea

of your paying habits. Technically we look at it as more like a character

thing. So it's more of when you promise to pay something we want to make

sure that you actually stay on top of your payments- That's definitely the

first step, and then second step we look at your income.

The reason why that is so important

is we need to know that you can actually service the mortgage with your

current debts that you might have or any financial

obligations you might have. So we look at that and then we also look at your down

payment which is also very important to kind of see how many savings you have,

what kind of saving habits you might have, so in a way we can look at credit,

what you think that you might get pre-approved for, depends on the house

you are looking for as well, your income saving habits, a whole

bunch of different things.

Do you require access to like the

financial records of people? In terms of when you're looking at in terms of maybe

their credit score or their income or so on?

Yeah, for financial records I guess,

for most average people, will look at income statements so that could be your

recent pay stub, it can be a job letter, it could be direct deposits going into

your account, what's your income. We could also look at your year-end statements to

kind of see if you're making any overtime, you might have some bonuses,

you might have some shares or anything in the company so it could be a factor of

both and ideally if you would like to get the most income as possible, which it

really does help you qualify for a mortgage.

So when we talk about income,

does that include- is there a difference between a full-time job,

how about people who are consultants or have their own company,

does that have any impact?

Yes, absolutely. So if you're a full-time

employee it all comes down to your debt servicing. So you could be a

part-time person or a full-time person but if the income is there to qualify

for the certain amount that you're looking for

it doesn't really matter. Start times could matter if you've started and

you're still on probationary period with your employer, that could definitely

effect. If you're self-employed we actually like to take a two-year average

for self-employed or contractors we kind of look at them as self-employed as

well, because their income can fluctuate, you can vary when the banks actually

want to see like a two-year kind of like an average, to see how the income has

been the last few years.

Is there a difference between mortgage specialist-

I mean like applying for mortgage specialist with a bank versus an

independent company?

Yeah, a little bit so applying what the mortgage specialist

with a bank is you're dealing with the bank employee, so you're dealing with

someone who is very familiar with bank policies, bank procedures -someone who has

direct access to the employees at the bank as well which are the underwriters

which is someone that is going to look at your deal, someone was going to

approve your deal, is also- they work for the bank.

So they have direct access to the underwriters, they have direct access to

any other bank, different groups of the bank that they might need to reach out

to regarding your accounts and you might need, anything like that, and the biggest

difference I find between a mortgage specialist at a bank and a broker is a

mortgage specialist at the bank, they kind of have to go through constant

learning on a yearly basis. We have to go through annual courses and annual

certifications and we also know our bank policies inside and out because banking

as a financial institution, the industry is constantly changing. So it means

policies are changing procedures are changing and once you kind of focus you

kind of become that specialist.

Going back to some of the steps in terms of

getting pre-approved for a mortgage, do you also need some sort of collateral?

That like, whether it's a personal asset in terms of getting mortgage?

Absolutely, so in the mortgage process the collateral is actually the house

you're looking at buying. So that is going to be the collateral that you do

so we will- the bank will actually use that as a collateral.

Okay. Do you have any other things

to add in terms of getting pre-approved,

how to get pre-approved?

I would recommend when you do look at getting pre-approved for a

mortgage definitely, definitely do your research and the people that you're

talking to- a specialist or the independent broker, it should be someone

who is willing to work for your best interest in mind right. So

checking who has the best interest for you, who's going to work hard for you.

Everyone's situation is a little bit different, not everyone is 'cookie cut' is

what I'll have to call it. I used to really kind of take an interview of the

person that's gonna be working for you like as you might be taking an interview

for someone else or someone's gonna be-

like a real estate agent? Correct.

Doing that is because the financing part is just as important as the home

buying or finding part.

Okay, perfect. Well thank you very much for the

information. Thank you everyone for joining us, and we'll catch you next time.

That's another edition of Homebuyer's School.

Tune in next time for more expert

tips and tricks, and visit

homebuyersschool.ca to bring you one step

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