- Don’t open any new creditor accounts. If you already have enough credit cards etc…please don’t open or take out any new loans. A new loan will report on your credit score as an R0 and will be considered “too new to rate” and will take big points bite off your credit score.
- Pay everything on time. If you haven’t been paying stuff on time, start NOW. You don’t have to pay off the whole balance, but do make a little more than the minimum payment required.
- Keep balances LOW versus your available limits…as low as possible. Let’s say you have a VISA with a 10,000 limit…please try to keep that limit below 7000.00 and do this with all your revolving credit accounts. It’s better to spread the debt over different accounts than to accumulate it all on one credit card. And being over your limit takes a big hit on your credit score.
- Don’t close any old credit accounts…the longer you have had a good account open, the better. Even if you don’t use that student Visa with the 500.00 credit limit…if you’ve had that card for the past 10 years…GREAT! Close it after the mortgage!
- If you do not have any credit…or have had credit issues in the past and have NO CURRENT credit…open an RRSP loan. Banks won’t do a credit cheque on an RRSP loan for 2000.00 or less and it’s an instant approval. These loans will report to the credit bureau and will boost your score faster than a secured credit card would…plus think of the tax savings, take some of those tax savings and put it down on your loan. But, if you have a long term plan in mind…don’t pay off that loan too quickly! It should be reporting to the credit bureau for at least 1 to 2 years. Then, once you have had this reporting for 6 months, you can then apply for an unsecured VISA or MC as your second piece of credit on the way to building your credit worthiness for a mortgage or other major loan.
It always surprises me when I hear people say they simply renewed with their existing bank or mortgage lender. With today’s historically low rates compared to just a few years ago, it’s important not to be too quick to renew or refinance your mortgage with your existing lender until you check out all your options. Yet approximately 70% of Canadian mortgage holders will do just that, and the usual result is a typically higher interest rate and a mortgage product that might not be best suited to specific needs. Lenders are counting on the fact that most homeowners are too busy to ask all the right questions or to even inquire about getting a better rate. Don’t let this happen to you!
You should recognize that you are now negotiating from a position of strength as your mortgage principal has dropped and in most cases your home value has increased. Lenders will most likely see you as a lower risk borrower and consequently you should be getting the best rates and terms available. That won’t happen if you simply sign the renewal document provided by your existing mortgage holder. We make the lenders compete for your business to be sure you do in fact get the best mortgage possible. We’ll review your current situation and ensure you get the best rate and terms suited to your needs. We can even sometimes hold the best interest rates up to 120 days before your renewal date! It’s definitely worth a quick call to ensure you’re making the right decision.
HELPFUL TIPS ON SPEEDING UP A MORTGAGE APPROVAL
- Find all your tax info for the last 2 years (just in case we need to use overtime income, part time income etc or if you’re self employed.
- Ensure your cheques (used for the pre-authorized withdrawals and account ownership confirmations) are pre printed and not blank without your name on top. Handwritten name and addresses are not acceptable by many lenders. Request printed cheques if you do not already have them.
- Make sure you have a full 90 day history of the account or accounts where you’re holding your downpayment. If your downpayment is coming from multiple accounts, we will need all account histories, or if it’s being transferred from an RRSP etc make sure you have an older statement to prove the funds are over 90 days old. This is to satisfy Canada’s anti-money laundering laws.
- Gifted downpayments are allowed if from an immediate family member (parents or siblings only). If it’s not from immediate family, the bank considers this downpayment to be borrowed and we must factor in the cost of this loan into your overall debt servicing which can affect how much you can borrow.
- Ask your employer for a job letter now. The job letter should state how long you’ve been at your job, your annual income if you are salaried or your hourly rate and how many hours you are PAID for each week.
- Child tax benefit income is allowed by most lenders, but not all. Have birth certificates ready so that we may prove your child’s age and the continued receipt of this money.
- Spousal alimony may only be used if its court ordered and we must show a 3 month history, have the separation agreement ready.
- Keep all your pay stubs, all bank statements, all Gv’t cheque stubs etc from now until you’re formally approved.
- If you’re self-employed, it’s always a good idea to sign up with Revenue Canada’s online service in order to access all your tax info online. Please phone Revenue Canada and ask for an “E-Pass” and password to be sent.
- Ask your Realtor for 7 BUSINESS DAYS for “subject removals” this will ensure we have time to formally get you approved BEFORE you pay for an inspection or any other out of pocket expenses.