8 mortgage mistakes to avoid

8 Mortgage Mistakes to Avoid
Jackie Woodward // Mortgage Broker, TMG // info@mortgagegirl.ca // 780.433.8412

With mortgage lending guidelines tightening 4 times over
the past 5 years, it’s become evident that getting a
mortgage is not as easy as it used to be. To ensure you can
qualify under the new rules, at a minimum you need a
downpayment, stable income and a satisfactory credit
history, and even that isn’t a guaranteed formula for
financing approval.


Even if a borrower meets the minimum
qualifying guidelines required to get
approved, there are still some mistakes
you can avoid in order to facilitate a
favorable financing outcome. Below is a
brief overview of a few of the most
common things we see affecting a
borrowers mortgage approval status.


Avoid excessive transferring
between bank accounts

1

There are a few ways to obtain a downpayment in order
to purchase your new home and this tip applies when you
are saving up your own downpayment. Under the
Canadian Anti-Money Laundering Act you are asked for
confirmation the downpayment is from your own
resources. To do that, you need to provide a 90 day
history of the funds to show they have accumulated over
that period of time or have simply been in your possession
for at least that period of time and not just all deposited at
once.
Be aware if you are moving money around between
various accounts, you will be asked for transaction
histories from ALL of your accounts.

Jackie Woodward // Mortgage Broker, TMG // info@mortgagegirl.ca /780.433.8412

Avoid excessive transferring
between bank accounts

1

If you are unable to provide sufficient
supporting documentation for any larger
deposits, those funds MAY NOT be used
towards your downpayment.
If you are unsure, do disclose ALL details of
where your downpayment is coming from
to the mortgage professional prior to
proceeding with your home purchase.

.5


Over-estimating your income

2

One of the most important requirements of
obtaining a mortgage approval is the qualifying
income. Before you begin the process of
applying for mortgage financing, make sure your
mortgage professional is fully informed of exactly
how you earn your income.
This is especially important when you are selfemployed, paid bonuses or overtime, on contract
or paid by commission.
This will ensure your personal information is
accurate from the get-go and there will be no
unpleasant news after you believed your
mortgage would be approved.


Not knowing your credit score

3

Given we have already covered downpayment
and income guidelines, it is now time to review
the credit requirement as it is equally as important
in determining whether you can qualify for the
financing at this time.
With credit, what you don’t know CAN hurt you!
Being aware of what is on your credit report
before you begin the mortgage application
process will enable you to correct any
inaccuracies as well as to provide accurate
explanations for any credit issues you have
experienced in the past. And if your credit is
good, you have peace of mind knowing you can
request the most competitive interest rate.


Budget breakers

4

Avoid looking at property that is simply out of your
price range by getting a pre-approval. A preapproved mortgage will not only rate protect you
for up to 4 months, it will direct you on what is an
acceptable price range to shop in.


Low appraisal value

5

An appraisal may be required when you are
purchasing a home or considering a mortgage
refinance.
An appraisal confirms the value of the home by
comparing it to recently sold similar homes in the area.
If the appraised value does not support the purchase
price or estimated value of the home, your mortgage
approval could be withdrawn or in the case of a
purchase. If you still want to proceed, a larger
downpayment may be required if the seller is not
prepared to negotiate.
If you do have any questions or concerns about the
value of the subject home prior to proceeding with
financing, talk to your mortgage professional about an
automatic evaluation in lieu of an appraisal.


Tight timelines

6

A mortgage, like home buying is a process and
should not be rushed. This is a big commitment that is
going to impact the lifestyle you lead and you should
avoid getting pressured into making quick decisions
without being fully aware of all the financing options
available these days.
In order to not jeopardize your physical health and
well being with unneeded stress, we suggest you
have ample time to remove financing conditions for a
new home purchase if at all possible ; and given
there are a lot of other parties involved in the
mortgage registration process it is also advisable to
set a reasonable closing date to ensure you can
actually close on the possession date.


Late to prepare your paperwork

7

Sometimes issues come up during the mortgage process
that can’t be avoided; though most often can be dealt
with. The key is to be as prepared as you can and in
order to do that, you must have an open and active
dialogue going with the mortgage professional
throughout the entire process.
After the initial “conditional” mortgage approval is
received from the lender, you will be provided with a list
of what documentation is required in order to satisfy
those “conditions”. The list will include confirmation of
income and downpayment among other things
depending on your individual finances.
It's a good idea to have as much paperwork ready as
possible ahead of time that can be reviewed by your
mortgage professional prior to you putting in an offer.


Limiting your options

8

When you have less than a 20% downpayment, you as
well as the property have to be approved by both the
lender and the default insurance company. This
insurance covers the lender in the event the borrower
defaults and the premium for the insurance is passed
onto the borrower and added to the mortgage amount.
The cost does decrease as the downpayment amount is
increased.
There are presently 3 insurance companies operating in
Canada, however, majority of the lenders only deal with
1 or 2 of the three.
Increase your odds of approval by working with a
mortgage professional and lender who have access to
all three insurance companies instead of limiting your
selection by a third.


Questions? Let’s chat!

Jackie Woodward

Mortgage Broker, TMG
Phone: 780.433.8412
Email: info@mortgagegirl.ca
Visit: www.mortgagegirl.ca
Getting approved for a mortgage can be quite stressful, however,
educating yourself on the mortgage process and knowing what to
expect can prepare you for any situation that arises. I hope this
article will act as a prevention checklist for you to ensure your
bases are covered and set up for a home run. As always, I
recommend you contact your favorite mortgage professional to
ask any specific questions you may have about your own
mortgage options in order to ensure you’re getting accurate
information that applies to you.


8 mortgage mistakes to avoid

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