With historic house sales and increases in the average home price in the GTA and the rest of the province, the housing sector is booming in Ontario. One of the best things you can do to streamline the process and increase your sense of buying power is to get a pre-approval. You can borrow as much as you're approved for with little risk if you have pre-approval. But before you begin, you should be aware of the pre-approval procedure, as with anything with mortgages.

Although it isn't complicated, the mortgage pre-approval procedure is quite significant. You're more likely to receive a fantastic deal on your mortgage if you read and abide by these five pieces of advice.

  1. Start by requesting a mortgage pre-approval.

Most individuals believe that contacting a realtor and beginning the property search are the initial steps in the home purchasing process. It is not accurate. It would help if you started by requesting a mortgage pre-approval. After all, you'll want to act if you find a house you like. A procedural step is skipped if you are mortgage pre-approved. Knowing how much you can afford to spend is made more accessible by being pre-approved. With the help of our mortgage affordability calculator, you can obtain a decent idea of how much you can afford. However, a mortgage pre-approval gives you the upper limit, which is always the amount the bank will approve you for.

  1. Compare pre-approval rates to find the best deal.

You should look around for the best mortgage rate, just like you would before choosing a property. Don't just walk into your neighborhood bank branch and hope for the best. Investigate and compare mortgage rates on your own, or engage a mortgage broker to bargain on your behalf. Your regular payments and the overall interest you pay can vary significantly by even half a percentage point. Please enter your information into our mortgage payment calculator to understand what we mean, then gradually raise or lower the interest rate.  

  1. Put together your paperwork.

It's advisable to start because gathering the paperwork required for a mortgage pre-approval and application might take some time. Find out from your mortgage broker what paperwork is needed to complete your loan, and start assembling it.

An example list to get you started is as follows:

  • Identification: This demonstrates your identity.
  • Statements from your bank account and investments show potential lenders that you have the financial means to make your monthly payments.
  • Asset proof is necessary so lenders can determine your net worth or how much money you have, such as a car, cottage, or boat.
  • Evidence of income Pay stubs or a note from your employer will suffice to give prospective lenders assurance. If you are self-employed, you will require a notice of assessment.
  • Details regarding your debt: You must include your credit cards, auto, and school loans. Lenders have access to databases containing this information, so trying to conceal it will appear terrible.
  1. Continue to speak with your broker

Keep your phone number handy in case your mortgage broker needs to get in touch with you. Avoiding excursions or holidays where you won't have a phone or email access during this period is advised. If you're unavailable, they can assume the worst about your motivations and deny your request for a pre-approval mortgage. If you must leave town immediately, let your mortgage broker know in advance.

  1. Review the small print

Your loan officer will send you a pre-approval document after you have been pre-approved. The interest rate, loan terms, and total mortgage amount that you have been pre-approved for are all described in this document. Even if it sounds like financials, reading the fine print on every page is crucial. It's a good idea to ask your family's accountant or lawyer to check into the situation.

What Not to Do After Getting a Mortgage Pre-approval?

You should refrain from doing things regarding the pre-approval process, even if it is a good idea to try to know what you can get pre-approved for when applying for a mortgage loan.

  • Only apply for credit after being pre-approved. – It's critical to refrain from adding any additional prospective debts after supplying figures that accurately reflect your current financial status. Applying for a credit card, for instance, may make it more difficult for you to pay off the balance in full.
  • When entering the numbers, leave some wiggle room in your budget because financial conditions can change. Don't anticipate budgeting at the very high end of your budget.
  • Please don't add anything to your total budget that could impact the figures when it comes time to meet with a lender. Refrain from making any more significant purchases. The figures ought to remain constant.
  • Keep your employment status the same; refrain from leaving your current job or applying for positions that might need a probationary period. The data should remain the same, including the wage ranges you supplied during the pre-approval procedure.

Conclusion

Pre-approval for a mortgage is an essential step in the planning process. Spend time, look around for a good deal, and organize your finances. You will have taken the first crucial step toward realizing your dream of house ownership once you receive pre-approval for a mortgage. You will also have spared yourself from potential future hassles.