If you’re considering getting a mortgage in Canada, one of the first questions on your mind will be ‘how difficult is the mortgage approval process?’ Whether you’re getting your mortgage from a privately owned entity such as Altrua or one of Canada’s traditional financial entities, there are some factors that will determine the success of your application. We’ll explore the main ones below.
Mortgage Application Requirements
Before you apply for a mortgage, you should first seek to determine whether you are in a position to qualify for this homeownership loan. Canadian citizens and people who have been Canadian residents for a long time will find that lenders rely on their credit reports. A prospective mortgager who does not have credit history should try to create a positive one by taking small loans and a credit card and being disciplined with payments. For those applicants who have recently arrived in Canada, the credit history from their previous homeland may suffice. Mortgage seekers also need to have sufficient funds to cover their deposit as well as closing costs.
A smart move you can make is to visit the institution to get pre-approved for a mortgage. Your income and savings will play a great role in determining the value of the loan you get pre-approved for. While the details of this vary according to institution, in general, you are expected to spend no more than 32% of your monthly income on servicing a mortgage and covering certain housing-related costs. Additionally, no more than 40% of your income should be devoted to loans, including your prospective mortgage.. If you do not yet have a job, you may be required to deposit at least one year’s worth of mortgage payments before being pre-approved.
Since there are many options when it comes to mortgages in Canada, you should also consider consulting a broker. This mortgage expert will help you sift through the various mortgage options provided and narrow down to the ones (or one) that best suits your needs. You can also find all kinds of mortgage info on Rates4U.ca and get the best prices possible in Canada.
The Mortgage Application Process
Once you’ve got your pre-approval sorted, it is time to start actively searching for a property to call home. Each pre-approval letter typically remains valid for 120 days, which means that you have 120 days to find the property you wish to purchase. After you have completed and submitted your application form, along with all relevant documents (proof of down payment, sale agreement, etc.), you wait for your mortgage provider to do the processing. This length of time varies by institution but typically takes between a few days to three weeks. Once the funds have been disbursed, and the mortgage has been registered, you can return to the seller to finalize the details required so you can take possession of your new property.
The level of difficulty mortgage seekers face will vary depending on each individual’s situation; however, for the most part, mortgage providers like Altrua have established systems that remove much of the hassle for mortgages.