What to know about getting a Canadian mortgage

Most homeowners in Canada will require a mortgage to purchase their first home. A house or condo is a considerable investment, especially in hot markets like Toronto and Vancouver. With a price point of hundreds of thousands of dollars (if you’re lucky!), it may be the biggest financial investment you make, so finding the right mortgage is an important first step on your way to home ownership.

There are a few ways to get a mortgage, with most Canadians going through one of the big banks or a broker. Both options can come with high rates that you can try to negotiate, and often require in-person visits. A third option that’s becoming more popular is to go with a FinTech mortgage provider, like Pine. When searching for a provider, you want to consider what makes the most sense for you: does it require an appointment you have to take time off of work for? Do they guarantee the best rates, or will you have to negotiate? Is there a long wait to get approved? 

With so many questions surrounding how to get a mortgage, we’ve covered a few of the most popular ones below.

How do I get the best mortgage rate? 

Whether you decide to go with a bank, a broker, or a FinTech mortgage provider like Pine, it’s important to take the time to find the best rate. This can save you thousands of dollars over the life of your mortgage, so it’s worth shopping around. Traditionally, rates are negotiable with banks, the onus is on the applicant to negotiate to find the best one. When using a broker, they’ll negotiate for you, however, they may also have access to special rates that you are not aware of. You’ll also have to choose between a variable and a fixed mortgage, and a term length, all of which will impact the rate you settle on. 

Things to consider: Beyond the rate, what other perks come along with the mortgage? Is there a cash back offer? What are the conditions? Talk to your broker or bank to get all the information you need to make your decision, and use a mortgage calculator to determine your payments.

Do I need a mortgage pre-approval?

Though it’s possible to purchase a home without prequalifying, Canada’s competitive real estate market means that most sellers will be looking for buyers who prequalify. Because there’s so much competition, buyers who submit an offer with a condition - like securing financing - are more of a risk compared to buyers who don’t have conditions. This means that buyers who submit an offer without conditions are preferred by sellers. Being prequalified will save you time and could potentially mean the difference between a winning offer and going back to search mode.

Things to consider: A pre-approval also helps you proceed with the knowledge of exactly how much you can offer and afford. In bidding war situations, this is a helpful piece of information to carry with you so you don’t overextend yourself.

When should I get a mortgage pre-approval?

Real estate moves quickly, and being pre-approved will help ensure you’re able to commit to the right home when it comes along, without any delays. Most pre-approvals are held for 90 to 120 days, after which you can reapply again. Pre-approvals also help you secure a rate, an advantage in a rising rate environment.

Things to consider: Look for a provider that won’t keep you waiting to hear if you’re pre-approved. With volatile markets, the last thing you want is to put the perfect home on hold because you’re waiting on paperwork.

How much do I need for a downpayment?

Most real estate transactions require a downpayment to prove that you’re committed to buying the house. This is usually between 5% to 20% , and is required by financial institutions to complete a mortgage, as well as regulated by the Government of Canada.

A home deposit is different. This is occasionally required by sellers to confirm interest in completing the sale, and pending a successful close, the funds can be put towards your closing costs or down payment. The amount is usually set by the seller.

Things to consider: A bigger down payment will mean a smaller monthly mortgage payment. However, if mortgage rates are low and you anticipate any big repairs or immediate moving costs, you may want to have a slightly lower down payment to keep more cash available in the short-term.

How do I make getting a mortgage easier?

The mortgage approval process can be time-consuming, complex, and tedious. It can also be filled with challenges that make it hard to follow, and add costs.  Making sure you consider your options upfront will help make the home buying process less stressful. 

Think about what’s important to you when it comes to your mortgage broker and the process:

• Do you want to apply for your mortgage from home?
• Do you understand the mortgage process, and has it been made clear?
• Will your provider show you the best mortgage rates upfront, without negotiating?
• Is the mortgage pre-approval process quick and efficient?
• Are there extra perks, like cash-back offers? 

If a low stress, apply-from-home, and transparent mortgage experience sounds appealing, Pine may be for you. We’re committed to a customer experience that puts people first to save you money and help you make sense of a complex process. We’ll take care of all the paperwork, and if successful, you’ll be pre-approved quickly, with the absolute best rate we can provide - no negotiating required.

And if you’ve got more questions, you can always chat with our team, who can provide unbiased advice without the pressure to sign anything.