The process of qualifying for a mortgage has 2 stages.
When you first decide you are ready to purchase a home, you provide a mortgage specialist with information about your income, assets, savings and debt.
Based on this information, you are given a commitment letter, which let’s you know the maximum amount the lender would be willing to lend you.
This is the Mortgage Pre-Approval.
At the time you submit an Offer on a property, the lender will then determine the appraised value of that specific property and confirm the exact amount they will lend you for that property.
If the combined amount of your down payment + the mortgage is less than or equal to the selling price of the property, you should be able to proceed with the purchase.
This is the Mortgage Approval.
It is extremely important that you maintain a good credit rating, steady employment and do not make any major purchases during the time you are house hunting. These are all factors that can affect your ability to access mortgage funds.
And don’t forget to plan for closing costs, such as Land Transfer Tax, lawyer’s fees and moving costs.
It is prudent to spend less on a property than the maximum amount of your mortgage pre-approval.
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