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 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?
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
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.
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