The mortgage approval process in Canada is surprisingly straight forward even if it appears to require a lot of paperwork and time. Here are the typical things involved with getting a mortage approval in Canada.
Step 1: There’s Actually Two Steps
Mortgage qualification in Canada is actually a two-step process at the beginning, with evaluation coming in the forms of the person applying for the mortgage and the property itself. Naturally, the economical situation of the applicant needs to be considered to see if they can afford to make the mortgage payments, etc. The other things inspected is the home itself, which needs to be considered for the amount of money asked and that it provides enough security for the amount of money required for the loan.
Step 2: Credit Reports
Good credit is absolutely essential to securing a good loan, and it is something that comes up almost immediately. The best way to prepare for a credit check is to get ahead of it by building up good credit. Don’t take on more than you can afford, make payments on time, and act financially responsible. That helps the credit checks swing in your favour. Additionally, be as up front about your credit as possible, and never try and cover up any of your existing financial obligations, debt-related or otherwise. Not only will these be found in the process, but even if they go unchecked, you’re only setting yourself for future disaster with one of the most significant purchases of your life.
Step 3: Property Assessment and Property Value
Property values are made to see if the home in question can recoup the cost of the loan involved, which is a significant aspect of any mortgage qualification. This is usually done through an automated computer program that looks at the property and can be performed fairly quickly if the required information is properly presented.
Step 4: The Pre-Approval
Getting a pre-approval for a mortgage takes the property value as a hypothetical at the beginning, but it doesn’t remove the eventual home entirely from the equation. If anything, it’s best to think of a pre-approval as a line to never cross rather than a fixed amount. High risk properties will decrease the amount you can get, while safe purchases rarely increase the amount.
With the right company, your mortgage approval process will be fast and mutually beneficial, but that doesn’t mean you have to hasten it. Be sure to build good credit before getting a loan, and have the right paperwork ready when needed.