Don’t be intimidated by the mortgage business. Here we break down what you need to know and how to get it done right.
The daunting task of obtaining a mortgage in Mississauga … or anywhere else for that matter, can seem like a pretty big obstacle at first, but with some basic education about your options and an understanding of the industry, getting approved will hopefully end up being much simpler than you thought it would be.
It’s important to remember that mortgages are all basically loans (yes even if you’re paying them off over 30 years) and there is no such thing as a perfect borrower – everyone has some degree or other blemish on their credit file so don’t stress too about anything being “too good to be true”. Of course, these types of “too good to be true” offers exist but only in the MSM and TV shows where they like to make it look like everyone with a 3-digit income is getting approved for mortgages worth more than the actual value of their homes. But the truth is that people who fall into these situations are typically business owners with significant assets and cash flow independent of their operations. Before we get into all that though I wanted to touch on something that has become fairly common in Mississauga which has been often referred to as “house hacking”. This term gets thrown around a lot when we talk about getting your first place so let’s clear up what it actually is.
House hacking is essentially buying a property with the prospect of renting out rooms to help pay the mortgage (or even using it as a rental yourself). I’ve heard countless stories where young people buy homes and fit 4-6 other family members over the age of 18 into them in order to try and get approved for mortgages they otherwise wouldn’t be. This isn’t house hacking; this is what we call “blatant fraud” and eventually lenders will catch on and start rejecting those applications so don’t waste your time because you’re never going to win.
Mortgages are generally available through two different channels: Banking institutions – whether it’s Canada or not, major banks like TD Canada Trust, CIBC, Scotiabank, National Bank etc. all have similar products and will offer loans to pretty much anyone that qualifies. I would caution against going with one particular bank because there is no real benefit from being loyal unless you have other investments with them as well. Investment companies – these are typically mortgage companies that exist for the sole purpose of handling your mortgage application and mediating between you and a bank or a group of banks. At first, I was hesitant about going this route since brokers always seemed to charge higher rates than everyone else but after obtaining multiple mortgages through my brokerage, I can assure you that should not be the case at all. In fact, our rates were often lower than what the banks offered us directly so make sure you obtain quotes from at least 2-3 mortgage professionals in Toronto before settling on someone.
Once you’ve got the right information and your documents in order, it’s up to you to make sure your application process is seamless and painless because there really aren’t any shortcuts unfortunately (besides taking out a second mortgage on your parent’s house – good luck). The most important part of getting approved for a mortgage is ensuring that all your paperwork is submitted correctly. I know, I already said that but it bears repeating. Some Lenders are looking for people with stable jobs who can demonstrate they have always paid their bills on time, not necessarily people whose only income comes from tips or commission sales.
A lot of people think that once they get their first place, they’re on easy street and can now go around buying up all sorts of expensive stuff to make their lives seem more interesting. But no! There’s still a ton of work to be done: grocery shopping, paying bills, washing clothes, cleaning your place – these are all things you will need to do every single day and it’s easy to get overly excited about having your own condo that it becomes overwhelming. Instead take baby steps and buy something that is within your means so that if worse comes to worse you’ll have the option of just selling it for what you paid. Hopefully this article has given you some idea of how getting a mortgage works in Canada – because almost everyone does have a mortgage at one point or another so don’t let the process intimidate you.