First Time Home Buyers

Pre-Approval

Obtaining mortgage financing is one of the most important steps in the home buying process, but it can also be the most complicated. To make it easier, we recommend you get pre-approved for financing before looking for a home.

Pre-approval helps you:

  • Determine what you can afford. Knowing your price range makes it easier to shop around for houses with confidence.
  • You will be able to make an offer right away.
  • Secure today’s mortgage rate for 90-120 days. Locking in protects you from any mortgage rate increase for up to 120 days. If mortgage rates should fall during this time, you will still be able to take advantage of any decrease.
  • Speed up financing agreement turnaround. During the pre-approval process, you will be preparing all the documents you will need to obtain approval once you’ve decided on a house. Having these documents ready may give you an advantage over others who are bidding on the same property. And your pre-approval letter reassures the seller that you are able to obtain financing should your offer be accepted.

Your pre-approval depends on three things:

1. Your Down Payment

Mortgage lenders and insurers want to see that you have a down payment ready and do not need to take out a loan for it. It’s best to disclose both the amount of your down payment and where it comes from (cash, investments, RRSP or gift) on your application.

Cash: Lenders look at your last 3 bank statements to see if you have enough money saved for your stated down payment.

Investments: Lenders require a recent statement of non-registered investments such as stocks, bonds and GICs.

RRSP: You may use up to $20,000 from your RRSP tax free provided you have not owned a home for the last 5 years.

Gift: If any or all of your down payment is a gift, it must be from a relative and accompanied by a letter stating you are not required to pay the money back. You must also provide a bank statement that shows the deposit of the gift.

2. Your Income

Lenders will decide how much you qualify for based on a certain percentage of your monthly income. There are different requirements depending on whether you are on salary, commission, hourly wage, are self-employed or on a pension. A Bayfield Mortgage Broker can help you prepare the necessary proof of income to get approval.

3. Your Credit History

Lenders will consider how much you owe as well as your repayment history to assess your credit risk. A Bayfield Mortgage Professional can help facilitate this credit check for you. If you have poor credit history, a Bayfield Mortgage Professional can advise you how to improve your credit. Contact a Bayfield Mortgage Professional today to begin the pre-approval process.

Other things to consider >>