5 Most Important Tips That Can Help You Get Your Mortgage Approved

It's crucial to prepare yourself if you want to jump into home ownership. The most important stage in the process of buying a house is applying for a mortgage, followed by monitoring interest rates and looking for the ideal home. It might seem difficult but you can organize your financial matters in advance to help yourself. The following 5 important strategies can help your mortgage application get accepted.

Save for the down payment

A down payment, usually referred to as a lump sum of cash, is needed when purchasing a home. For several reasons, the larger your down payment, the better, you'll pay less interest because you'll need to borrow less money if the down payment is higher. But securing a mortgage approval depends on the down payment. In Canada, a down payment of less than 20% of the home's cost necessitates the purchase of mortgage loan insurance by the buyer. Your monthly mortgage payment will go up as a result of paying these insurance premiums.

Generally, you should try to save as much money as you can for your down payment. However, the more money you put down upfront, the chances of getting a mortgage approved increase. You can compare variable and fixed mortgage rates, run-down payment and amortization simulations, and more with the aid of our mortgage payment calculator.

Try to increase your credit score

Credit scores in Canada range from 300 to 900 and fall into the following five categories: poor, fair, good, very good, and excellent. Depending on the credit bureau being used, the precise categories differ, but the procedure is largely the same. Knowing your credit score is crucial because it provides an overview of your whole financial situation. Your credit score will be used by private mortgage lenders evaluate your financial reliability and capacity for debt repayment. The likelihood that you will be given the lowest mortgage rates in Canada increases with your credit score. Your score should ideally be at least 660, though a higher score is always preferable.

Stable Income

Keeping your day job is crucial as you apply for a mortgage. Without evidence that you can make your payments, mortgage lenders will not accept your mortgage application. The best way is to demonstrate that you have a full-time job and ensure that you can pay long-term interest. Long-term employment with a company will also benefit your application. It's best if you and your partner both work full-time jobs when you apply for a mortgage together.

Self-employed people can get their mortgage approval easily if they check their debt-to-income ratio. The percentage of gross monthly income that is used to pay your monthly debts is known as your debt-to-income ratio (DTI). When the DTI is low, the borrower can repay easily, thus lenders pay attention to DTI. High DTI means borrower have more money available for a mortgage payment.

Get pre-approval before applying for a mortgage

When a lender assesses your financial status and pre-approves you for a specific mortgage amount, interest rate, and duration, this is known as a mortgage pre-approval. Depending on the lender, mortgage pre-approvals are good for 90 to 120 days, giving you time to find a home without missing out on a fantastic mortgage deal.

Mortgage lenders will take into account your income and job status, your debt-to-income ratio, as well as your assets and liabilities. Besides your credit score and the size of your down payment, a mortgage pre-approval is helpful since it enables you to look for homes within your budget and enables you to submit an offer faster.