How to Improve Your Chances of Mortgage Approval: Strategies to Follow in 2024
Purchasing a home in Canada is a significant milestone in many people’s lives; it represents the fulfillment of a dream. Moving into 2024, the landscape of real estate is evolving, offering challenges and opportunities for new homebuyers.
Understanding the current real estate market is important before exploring the different mortgage options.
In 2024, BC’s real estate market will remain dynamic, with property values and demand fluctuating across different places. It is important to make well-informed decisions; conducting thorough research on market trends, property values, and the economic outlook in British Columbia is essential.
A mortgage is a big financial responsibility for a homeowner. Mortgages currently make up three-quarters of household debt in Canada. Obtaining a mortgage loan is an important step for homeowners. We need to consider each step carefully. Here are some key factors that lenders consider while evaluating mortgage applications in Canada.
By following these guidelines, you can increase your chances of securing a mortgage loan and make your dream of owning a home a reality.
Improve Your Credit Score
It is important to understand your credit score before applying for a mortgage. Credit scores range from 300 to 900. If you want to access the lowest mortgage rate, you need a credit score of at least 620 or higher. Before beginning with your application, it’s a good idea to assess your credit score and take note of your current financial standing.
Getting your credit score checked is easy! You can simply call Equifax to keep track of your borrowing history in Canada. Once you have your report, take a close look to make sure everything is accurate. If you discover any errors in your report, or have a lower credit score due to a few missed payments or too many credit applications in a short period of time, don’t panic. Follow a few steps to repair your credit before applying for a mortgage.
- Pay your debt to improve your credit utilization.
- Make your payments on time, and if possible, make more than the minimum amount.
- Do not close old credit cards, as the length of your credit history is an important part of your score.
- Diversify your credit mix with one-line credit and a credit card.
Having a good credit score is the first step towards securing a mortgage. You can also qualify for a better interest rate on your mortgage with the help of a good credit score.
Down Payment
The minimum down payment required is based on the purchase price of the house.
Up to $500,000
5%
$500,000 to $999,999
5% of $500,000 + 10% of remaining amount
$1,000,000 or more
20%
When you want to save for a house, having a strict budget is one way to make your down payment goals a reality. If you need a large down payment, it may require cutting down on some discretionary expenses to increase your savings. Another way to increase your down payment is to start side work, including a job or freelancing, which can help your down payment savings.
There are many government programs offered to first-time home buyers that can help them meet their home-buying goals.
First-time home buyers can receive up to $25,000 in shared home equity from the Canadian government for homes up to $722,000.
British Columbia property transfer tax rebates, in which properties under $525,000 will receive tax exemptions, and houses under $500,000 will be property transfer tax-free.
RRSP savings up to $35,000in the form of a tax-free down payment under the Home Buyers Plan.
Understanding, these programs can help you and will make a difference in affording your first home.
Know How Much You Can Afford?
On the path to homeownership, understanding your finances is a crucial step. It is important to be honest about how much you can afford to pay for your mortgage without negatively impacting your lifestyle and future financial goals. If you’re able to be more conservative with your mortgage and have financial stability, you’re more likely to be approved. This means looking for less expensive homes or properties in less expensive neighborhoods.
Shop Around
Shop around and find a suitable living for you. Search around to make an informed decision, consider neighborhood drive-bys, schools etc. Check whether public transportation is feasible and other safety measures. This is a big challenge as the location can’t be changed.
Prepare For Your Closing Costs
After the purchase price of the home, the closing cost is the next largest expense. The largest component of closing costs is a property transfer tax. As long as the home price is less than $500,000, you will be eligible for a rebate covering all your property transfer taxes. Other closing costs include lawyer and legal fees, property survey costs, home inspection costs, title insurance, and more. Having room for these costs while searching for a home will allow you to be aware of the true cost of buying a home.
Pre-Approval
Getting pre-approval for a mortgage involves submitting a loan application to a lender who will assess your credit, income, and other financial factors. This process helps you understand the maximum loan amount you qualify for, giving you a clear budget when searching for a house. Moreover, a pre-approved letter shows that you are a serious buyer, giving you an edge in the competitive market.
The Power of Professional Mortgage Broker
The mortgage approval process includes complexities. A professional mortgage broker can be your trusted advisor throughout your journey, mortgage broker can:
Simplify Your Process
Mortgage brokers guide you through the application process, ensuring you have all necessary documentation.
Negotiate
Their expertise helps to negotiate for the best possible interest rates and terms on your mortgage.
Personalized Advice
A mortgage broker tailors their approach to your specific financial situation and goals.
Partnering with a qualified mortgage broker in Surrey, BC can enhance your likelihood of securing a mortgage that perfectly fits your requirements and financial plan.
Securing a mortgage in Surrey, Canada requires careful planning and financial discipline. Owning a home in Surrey is a dream within reach, By following these valuable strategies, conducting research, and seeking guidance from a trusted mortgage broker, you can navigate the mortgage approval process with confidence and turn your dream of homeownership into a reality.
Alpha Mortgage House Corporation is a Mortgage Broker in Surrey, BC. We provide mortgages for Home Purchases, Project financing, Second mortgages, Commercial mortgages, Mortgages for first-time home buyers and more. Alpha Mortgage is a one-stop solution for all your mortgage needs. Our team works with top lenders to provide you with the best financial options.