Submitting a strong credit or mortgage application is essential to securing the best terms and rates and making the mortgage process quick and seamless. Lenders want to see a clear financial picture that demonstrates your ability to repay the loan.  It’s also important to apply with correct personal information (marital status, address history, and citizenship status).

Here’s what you need to make a solid application:

✅ Acceptable Credit History & Score

• Aim for a credit score of 680+ for the best rates and terms.  For insured mortgages (less than 20% down) 600 is the minimum credit score.  If a borrower’s credit score is lower than 600, a down payment of 20% or more will be required.
• Pay bills on time, reduce credit card balances, and avoid multiple credit inquiries before applying.
• Avoid missed payments, collections, or defaults on your credit report.
• We will review your credit report before applying and address any errors.

📋 Stable Employment and Income

• Show consistent employment history (ideally 2+ years in the same field).
• Provide proof of income, such as pay stubs, T4s, or  Tax Returns & Notices of Assessment for self-employed individuals.
• Canada Child Benefit can be used for income for children under 15.
• Work Pensions, Canada Pension Plan (CPP), & Old Age Security (OAS) can be used as income.

💳 Low Debt-to-Income Ratio

• Lenders prefer a debt-to-income ratio or Total Debt Service Ratio(TDSR) of under 44%, meaning your housing and monthly debt payments should be less than 44% of your gross monthly income.
• Pay down existing debt before applying to improve your DTI.

💰 Down Payment

• A larger down payment shows financial stability and reduces the lender’s risk.
• The minimum down payment in Canada is 5% for homes under $500,000 and 10% for the portion above $500,000.
• Canada’s Anti Money Laundering legislation (AML) requires that any money used for a down payment be confirmed and sourced for 90 days.  3 months of bank or investments will be required for each account holding any down payment funds.  Deposits over $3,000.00 will need to be sourced.
• Down payments can be gifted from an immediate family member or spouse.

📝 Complete Documentation

• Ensure your application includes all necessary documents, such as:
  • Recent pay stubs
  • T4s or T1 Generals (for self-employed applicants)
  • Bank statements (90 days) showing savings or down payment
  • Proof of additional income (child benefits, rental income, etc.)
  • Valid ID
  • Existing property documentation (property tax bill, mortgage statements, lease agreements for rental properties).

🤝 Co-Signer or Guarantor (if needed)

• If your application is weaker due to income or credit, a co-signer with strong financial credentials can help improve your chances of approval.

💼 Work with a Mortgage Broker

• A broker can present your application to multiple lenders and help you secure the best deal. They’ll also guide you on what’s needed to strengthen your file.

Key Takeaways

A strong mortgage application highlights your financial stability, responsibility, and ability to repay the loan. By organizing your finances, improving your credit, and providing thorough documentation, you’ll increase your chances of approval and secure the best mortgage terms.

Let us know if you’d like help preparing your application—we’d love to assist! 🏡✨

We put in the work upfront to ensure no surprises when you write an offer on your dream home. Our thorough pre-approval process focuses on income, credit, down payment, existing properties, expenses, and other critical items to set you up for success.

Income Documentation

• Employed Individuals: Letter of Employment, pay stubs, T4s, and bank statements to confirm deposits.
• Self-Employed Individuals: T1 Generals, NOAs, SOAs, and, if incorporated, T2 Generals and APFS.
• Pensioners: T4s, NOAs, pension documents, and bank statements to verify deposits.
• Parents: CCB statements, children’s DOB information, and bank statements to confirm deposits.

Down Payment Verification

We review up to 90 days of bank statements (30 days for some lenders with 20% down payments). Documents include investment statements, RRSPs, TFSAs, FHSAs, property sale documents, or gift confirmations. Deposits over $3,000 must be sourced.

Credit Review

We pull your credit report to identify and correct inconsistencies, ensuring there are no surprises.

While reviewing all this documentation is time-consuming, it allows us to provide clients and REALTOR® partners with solid, reliable pre-approvals. Unlike others, we prioritize accuracy to avoid heartbreaking situations where financial institutions fail to honor their pre-approvals.

Not all pre-approvals are created equal. Choose the team that works hard upfront to treat your money like their own.

This week, OSFI (Canada’s banking regulator) announced an important and sensible adjustment to the mortgage renewal process:

No More Stress Test at Renewal.

Before anyone jumps to conclusions like, “Isn’t that risky?”, let’s break down how mortgage renewals work in Canada:

• Most Canadian residential mortgages are structured as short-term agreements. Over 95% of all mortgages fall within 1-to-5-year terms.
• Because of these short terms, renewing your mortgage with your current lender is usually automatic. There’s no re-underwriting involved.
• When it’s time to renew, borrowers typically receive a renewal letter from their lender offering rates for different term options. The borrower simply picks one—no additional financial scrutiny is required.
• In fact, the current lender doesn’t even check if the borrower is still employed.

Now, if borrowers want to shop around for a better rate, that’s a different story. They have to go through the hassle of providing updated proof of income. Until now, they also had to pass a stress test—a requirement that felt unnecessary and inconsistent, given the lack of income verification from the existing lender during renewal.

This is what has changed.

This change is a huge win for the 12%–15% of borrowers who previously couldn’t shop for better rates because of the Stress Test. Shopping around is critical, especially in today’s environment where almost every renewing borrower is facing higher rates. Now, borrowers have a real opportunity to seek out and secure the most competitive deal available to them.

Why was this necessary?

For five years, OSFI insisted it was dangerous not to Stress Test mortgage renewals—even though they were well aware that lenders didn’t verify income during the renewal process. This inconsistency made the Stress Test a roadblock for borrowers looking to improve their terms.

Interestingly, it wasn’t OSFI but the Department of Finance that pushed for this sensible policy change, finally addressing the gap.

Why did OSFI resist this for so long? That’s a question worth pondering. But for now, let’s celebrate the fact that a flawed policy has been corrected, making the mortgage renewal process fairer and more consumer-friendly.

In a market like today’s, where every percentage point matters, this change empowers borrowers to make better financial decisions and secure the best possible rates. We may be back on track to an era of good mortgage policy.

Thinking Beyond the Mortgage: Financial Planning for Homeowners

When securing a mortgage, it’s easy to focus on rates and payments, but the true cost of homeownership goes beyond just the monthly mortgage. A solid financial plan can help set you up for success. Here are some critical questions to ask:

1. Have You Considered All the Costs? Do you fully understand the costs associated with owning a home? Beyond the mortgage, there are utility bills, home insurance, property taxes, maintenance, and more. Every dollar counts, and planning for these expenses can prevent surprises.
2. Have You Done a Household Budget? A detailed budget can give you clarity on your monthly cash flow. Knowing what you spend versus what you bring in ensures you’re living within your means and can make it easier to manage unexpected costs.
3. What’s Your 3, 5, and 10-Year Plan? Life changes, but having goals can help guide your financial decisions. Whether you plan to move, upgrade, or stay put, knowing where you want to be in a few years can help you make the right financial choices today.
4. Are You Prioritizing Savings and Investments? Building equity in a home is great, but what about your other financial goals? Will you have enough left over each month to contribute to savings, your RRSP, or a TFSA? Planning for the future should be a part of your strategy today.
5. Are You Living Within Your Means? Maintaining a comfortable lifestyle without stretching finances thin is the key to long-term success. Understanding your limits and sticking to them can keep financial stress at bay.

Homeownership is a major step in your financial journey. Make sure you’re prepared for not only today’s costs but also tomorrow’s possibilities. If you’re unsure about any of these points, let’s connect. I’d be happy to discuss how we can help build a mortgage plan that aligns with your long-term financial goals.

Stronger-Than-Expected Jobs Data and Easing Inflation: What Does It Mean for Mortgage Holders?

The Canadian economy has had a surprising turn of events in September, bringing both a boost in employment and a further slowdown in inflation. Statistics Canada reported a robust increase of 46,700 jobs last month, reversing the flat growth seen over the summer. The unemployment rate also saw a slight decline, down to 6.5%, marking its first drop this year. Full-time employment played a significant role, while part-time jobs took a dip. This job growth signals a healthier labor market, even as wage inflation is showing signs of slowing.

On the inflation front, there’s more good news. The Consumer Price Index (CPI) rose by 1.6% in September year-over-year—the slowest pace since February 2021—thanks largely to lower gasoline prices. While inflation is easing, prices remain significantly higher than a few years ago, especially for essentials like food and rent. This creates a mixed environment where Canadians feel the pinch, but policymakers are more optimistic about the path forward.

This economic backdrop places the Bank of Canada at a critical juncture. With inflation below the 2% target and the economy slowing, many experts, including Bruno Valko and Sherry Cooper, believe that larger rate cuts could be on the horizon. Traders have already increased their bets on a half-percentage-point reduction at the Bank’s upcoming meeting on October 23.

For mortgage holders and potential homebuyers, this could be a game-changer. The housing market is already showing signs of stabilizing after three rate cuts, with home sales gradually rising, especially in cities like Toronto, Montreal, and Vancouver. As more rate cuts are expected, mortgage rates may fall further, potentially bringing renewed activity into the housing market by spring 2025.

Stay tuned for the Bank of Canada’s announcement later this month—it could set the stage for the next phase of economic growth and real estate opportunities.

Thank you to Dr. Sherry Cooper and Bruno Valko for their insights!

In today’s fast-paced real estate market, the pressure to make quick decisions can lead some buyers to take risks they wouldn’t normally consider. One of those risks? Making an unconditional offer to purchase a property. While the allure of securing your dream home may push you toward this decision, it’s critical to understand the consequences and ensure you’re fully prepared for the financial and personal obligations that come with it.

What is an Unconditional Offer?

An unconditional offer is a legally binding agreement to purchase a property without including any conditions, such as securing financing or a home inspection. It means that once the seller accepts your offer, you’re committed to completing the purchase, no matter what happens.

Sounds risky? It is. And while it might make your offer more attractive to a seller in a competitive market, significant considerations are involved.

A Real-Life Example: The Risks of Going Unconditional

Let me share a story about a family we recently worked with. They were so eager to secure a home that they submitted an unconditional offer. Despite our advice to include a financing condition, they chose to proceed without it, convinced they had enough time and options to arrange everything before their closing date.

Then, life threw them an unexpected curveball. The main breadwinner of the family  was in an accident and ended up in the hospital. Thankfully, they will recover but will be out of work for a few weeks. However, their mortgage approval package, including the Mortgage Protection Plan (MPP) Life & Disability Insurance, wasn’t signed off yet. This means that if the accident had been more serious, resulting in death or long-term disability, they would have been unable to complete the purchase.

Because they made an unconditional offer, they risk losing not only their deposit but also the home. Worse, they could face legal action. All of this could have been avoided if they had included conditions in their offer or had proper insurance coverage in place.

The Importance of a Mortgage Plan and Manulife MPP

Before making such a major financial commitment, it’s essential to have a well-thought-out mortgage plan. The reality is, that life can be unpredictable, and unforeseen circumstances, such as illness, accidents, or job loss, can affect your ability to meet your financial obligations.

This is where Mortgage Protection Plan (MPP) or other insurance options come into play. MPP can be your main source of credit protection or act as gap insurance, protecting you in the event of unforeseen life events before you can arrange for a more comprehensive, private insurance policy with an advisor. It can ensure that even if life throws unexpected challenges your way, you won’t lose your home or face significant financial repercussions.

Lessons for Buyers and Realtors Like

• Always prioritize your financial security. While the housing market may be competitive, never feel pressured to risk it all by making an unconditional offer without having a proper mortgage plan in place.
• Consider all potential outcomes. What happens if your financing falls through, if an unexpected accident or illness occurs, or if your employment situation changes? These are all scenarios that could leave you unable to complete your purchase, potentially resulting in the loss of your deposit or even legal action.
• Insurance, while optional should be part of your plan. Even if you plan to switch to a more permanent policy later, having an interim plan like MPP can safeguard your financial well-being. Make sure the paperwork is signed and processed before waiving financing or other conditions.

The Bottom Line

Taking the step to purchase a home is exciting, but it shouldn’t come at the cost of your financial security. When making offers—especially unconditional ones—ensure that you’re protected with a solid mortgage plan and appropriate insurance coverage. As the saying goes, “Better safe than sorry.”

If you’re considering making an offer or want advice on how to safeguard your home-buying journey, reach out to discuss your options. We can help create a tailored mortgage plan and ensure you’re fully covered, no matter what life brings.