5 Financial Steps to Take Before Applying for a Mortgage in Canada

Prior to applying for a mortgage in Canada, it’s good practice to get your finances in order-they say that preparation is the key to an accepted or denied mortgage application. Here are five things you need to do to become a good mortgage candidate.

1. Improve Your Credit Score: Your credit score will dictate whether you can get a nice mortgage. A score over 680 will get you the best rates. Work on your credit report, clear it of any discrepancies, maintain low balances on charge cards.
2. Decrease Debt: Your debt-to-income ratio is important when you’re shopping for a mortgage. Your initial goal should be to minimize unsecured forms of debt such as credit cards and personal loans, as a low ratio indicates to the lender that you are able to handle your own financial matters. 
3. Except for a larger down payment: And even though the minimum down payment is 5%, the more you save, the more you’ll avoid paying for mortgage insurance. This also improves your odds of acceptance. Don’t forget those last minute expenses when creating your quote. 
4. Obtain Pre-Approval: Before searching for your new home consider getting pre-approved; this will give you an understanding of how much you can borrow and lock in your interest rate. The pre-approval process gives you the confidence to stay in your budget and shows sellers you are a serious buyer. 
5. Gather Financial Documents: The lender needs to see some documentation to assess your financial health. While some lenders may ask for lots of documentation (it does vary), you should try to gather things like recent pay stubs, tax returns, and bank statements to speed up the application process. If you are ready it will help eliminate stress.

Completing these steps will give you a running start in your journey to receiving a mortgage with the best possible terms.

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