Getting Pre-Approved for a Mortgage in Canada

Getting Pre-Approved for a Mortgage in Canada

Benjamin Thompson Kirk

Getting PreApproved for a Mortgage in Canada Getting pre-approved for a mortgage is important so that buyers know exactly what they can afford. Some realtors will only work with clients who have a pre-approval in place.

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Credit Issues

Down Payment

One of the issues that pre-approval can uncover is regarding credit; the buyer may not even be aware that there was a problem with their credit until a pre-approval check highlights that this is the case.

Something relatively minor, such as a store card that the holder forgot to cancel, could show up on a credit report.

As well as a buyer’s credit score and income, the amount of down payment that they have available will factor into whether they are granted pre-approval for a mortgage. For a buyer to avoid CMHC’s mortgage default insurance, a down payment of at least 20% is required.

One way to increase the amount of down payment to hand is for a buyer to borrow money from their RRSP. A first-time buyer can borrow $25,000 tax free to use for a deposit on a property, and they will have fifteen years to repay this sum.

For more information about the Canadian property market, visit the blog of Benjamin Thompson Kirk.