Buying a home is a big decision. Getting a mortgage can seem complicated, but it doesn’t have to be. This guide will help you understand each step. It also includes tips to improve your chances of approval and get the best loan terms in Surrey.
Step 1: Check Your Financial Health
Before applying for a mortgage, look at your finances. Lenders will check your income, credit score, debts, and savings.
What You Need to Know:
- Credit Score – A higher score helps you get approved and lowers your interest rate. Aim for 680 or higher.
- Debt-to-Income Ratio (DTI) – Lenders want to know how much of your income goes to paying debts. Keep it below 43%.
- Savings & Down Payment – You need at least 5% for a down payment on homes under $500,000. You’ll also need extra money for closing costs.
- Job Stability – Lenders like borrowers with steady jobs. If you’re self-employed, you may need two years of tax returns.
Tip: Check your credit report for free at Equifax or TransUnion. Fix any mistakes to improve your credit score.
Step 2: Get Pre-Approved for a Mortgage
Pre-approval shows how much you can borrow and locks in a rate for 90 to 120 days. It also shows sellers that you’re serious.
Documents You Need:
- Proof of income (pay stubs, tax returns)
- Employment letter
- Credit report
- List of debts and assets
- Down payment proof
Where to Get Pre-Approved:
- Banks & Credit Unions – These traditional lenders offer good rates. But, they have strict requirements.
- Mortgage Brokers – They can compare options from many lenders to find the best deal.
Tip: Pre-approval isn’t a guarantee. Don’t make big financial changes before closing.
Step 3: House Hunting & Making an Offer
With pre-approval, you can start shopping for homes. Once you find one, make an offer with your agent.
Things to Think About When Choosing a Home:
- Location: Close to work, schools, and shops.
- Home Inspection: Make sure the home is in good shape.
- Price: Check recent sales to see if the home is fairly priced.
Once your offer is accepted, you’ll put down a deposit as a sign of commitment.
Step 4: Mortgage Application & Lender Approval
After your offer is accepted, you’ll apply for a mortgage. The lender will check your finances and order an appraisal of the home.
What Happens Next:
🔹 Lender Review – They verify your credit, income, and debts.
🔹 Property Appraisal – The lender checks if the home is worth the price.
🔹 CMHC Insurance – If your down payment is less than 20%, you’ll need insurance.
Tip: If your application is denied, ask for reasons. Consider other lenders or adjust your down payment.
Step 5: Mortgage Approval & Signing the Agreement
Once approved, you’ll get a commitment letter with the loan details. Review it carefully before signing.
Step 6: Closing the Deal & Getting the Keys
Closing is when you officially own the home.
Steps Before Closing:
- Meet with a lawyer to review documents.
- Pay closing costs like legal fees and taxes.
- Sign the loan agreement.
- Get the keys!
🎉 Congratulations, you’re now a homeowner!
Common Mistakes to Avoid
- Not comparing rates – A mortgage broker can help.
- Buying big items before closing – It can hurt your approval.
- Forgetting extra costs – Taxes, insurance, and repairs add up.
- Skipping the home inspection – Always inspect the home first.
How a Mortgage Broker Can Help
A mortgage broker can make the process easier. They:
✔️ Help you find the best rates.
✔️ Guide you through government programs.
✔️ Find a mortgage that fits your needs.
For more info:
- CMHC – Government mortgage programs.
- Financial Consumer Agency of Canada – Guidelines and protection.
- First-Time Home Buyer Incentive – Lower mortgage payments.
Final Thoughts
The mortgage process can seem hard, but with the right support, you can find the best loan for your needs. Whether you’re buying your first home or refinancing, knowing what to expect will make things easier.
