Mortgage Pre-Approval: The Pre-Purchase Step
Thinking of owning, moving or investing in real estate? Get pre-approved for a mortgage first to find out how much you can borrow.
Your Multi-Prêts broker will guide you through 5 simple steps
1st step: determine YOUR LENDER
Applying for a mortgage pre-approval from a bank or other financial institution does not affect your credit rating… if you are approved for a loan! But if you are turned down, your score will go down.
In Canada, banks and financial institutions are required to be able to refuse certain applications.
By entrusting the pre-approval stage to a Multi-Prêts mortgage broker, the requests made will not be detrimental to your credit, as the broker knows which institutions to approach and which to avoid according to your file. Your broker can also give you a good idea of the amount you could receive.
Pre-qualification: to get an idea of Your borrowing capacity
Consider pre-qualification as soon as you are about to start your search for a property. This simple step, which takes only a few minutes, is based on information you provide. It gives you a rough idea of how much you’ll be able to borrow. It also gives you a head start when it comes time to move on to the pre-approval stage.
How do I get a mortgage to buy a property?
A lot of documentation to provide
In order to verify that the amount you are requesting for your mortgage loan corresponds to your ability to pay and to evaluate the level of risk involved in your loan, the lending institution may ask you, among other things:
- recent pay stubs or your federal and provincial notices of assessment for the past few years;
- your credit rating;
- your debt ratio;
- the valuation of the property;
- the purchase contract.
The demand as such
Banks or institutions that are considering granting you a mortgage will have you fill out a loan application and, if necessary, will also ask you to provide other information regarding your financial situation. In the end, you will receive an approval or, in a less desirable situation, a refusal.
Signing the acceptance form
Just before signing the approval acceptance form, the lender may ask for additional information, sometimes quite detailed, about the property. Once the lender has this information and is satisfied with it, they will proceed to sign the acceptance form.
Renewing my MORTGAGE
Can I renegotiate the terms of my loan at the time of mortgage renewal?
Of course you can! When your loan matures (for example, after 5 years, if you chose a 5-year fixed-rate closed mortgage), you can review certain parameters and conditions: starting with your rate, as rates will surely have changed since then (up or down).
If your financial situation has changed, you can also make some significant changes (why not make one or more additional payments to reduce your mortgage and pay less interest or increase your monthly payments to pay off your loan faster?)
A mortgage broker will help you make the necessary changes to facilitate your goals and negotiate your rate again and the terms of the loan.
To get out of debt, invest or renovate your home, consider refinancing
Your property, the key to achieving your goals
Both simple and multi-purpose, mortgage refinancing consists of borrowing the desired amount through your mortgage to pay off your debts at once, which are costing you a fortune in interest, or to carry out a project, such as:
- buy a snowmobile or another vehicule;
- Extend your home;
- start a business;
- acquire an income property.
What happens if I decide to refinance my mortgage before the end of my term?
Refinancing before the end of the term will result in penalties. You will need to check with your bank to find out how much these penalties can be.
Your Multi-Prêts broker can then calculate if the refinancing is worth it despite these costs, by comparing it with other borrowing options available to you (with higher interest rates than a mortgage).