Because of the many steps involved, many first-time home buyers and even seasoned borrowers find the whole mortgage approval process confusing. Perhaps, it’s not a surprise that it can cause some anxiety considering the fact that it’s likely to be the most expensive purchase most of us will make.

As the old saying goes, “Battles are won before the fight through preparation.” So, aside from being financially prepared, understanding the mortgage approval process will help you conquer your home loan fears.

Here’s a detailed overview of what to expect when applying for a mortgage in Ontario.

Step 1: Mortgage Pre-approval

Before starting your home buying search, getting a pre-approval would give you a good idea of exactly just how much “house” you can afford. This can help make the selection process much easier.

Most lenders will require the following information for the pre-approval:

  • Estimated Mortgage Amount – The amount you intend to borrow.
  • Estimated Down Payment Amount (the amount of cash you can put towards the purchase price – i.e. proof of bank deposits, investment accounts, gift letters, etc.)
  • Proof of Employment 
  • Proof of current income and recent pay stub
  • Employment letter from your employer stating your position and length of time with the organization
  • Notices of Assessment from the Canada Revenue Agency for the past two years 
  • T1 General and 12 months official bank statements
  • Monthly Financial Obligations (i.e. credit card, car loan, student loans, child or spousal support amount, etc.)
  • Information about your assets (i.e RRSP, TFSA, vehicles, cottage or boat, etc.)

Expect your mortgage broker to provide you with a pre-approval letter once you have been pre-approved.

Step 2: Making an Offer on a Home

When buying your dream home, you aim for the lowest price possible or at least to get good value for your money. The seller wants the most he can get from his property, too.

When it comes to buying a home, there’s no “wrong” question. Consider the following before making an offer:

  • “Does the home fit my budget?” You have to ensure that the property you want to make an offer on fits within your budget. That’s why getting a pre-approval is important.
  • “How long has the property been on the market?” If the property has been sitting on the market for a few months, it could be an indication that it’s overpriced. Factors such as home condition, pricing or economic influences need to be considered.
  • “Are there any issues with this house?” It’s worth asking if there are any problems that you should be aware of, even if the house looks picture-perfect. Getting the home professionally inspected will uncover any possible health, safety or structural issues and provide peace of mind.
  • “How’s the location?” Is the neighborhood safe? How close is the home to the workplace, school and amenities? You might want to rethink your offer if you’re dissatisfied with your answers.


The Written Offer

This is the official document that underwrites the terms and conditions of the home purchase between you and the seller.

When your offer is accepted, you’ll then need to provide the following information to your mortgage broker if you haven’t already:

  • A copy of the Real Estate Listing (MLS Listing)
  • A copy of the Agreement of Purchase and Sale
  • Down Payment
  • Status Certificate (condominium)
  • Home Inspection and Land Survey (if applicable)
  • Your Lawyer’s Name, Address and Phone Number

Step 3: Mortgage Approval and Closing

This final step means that the homebuyer and the property being purchased meet all the guidelines and requirements of the lender. 

All of the supporting documentation is sent to both the lender and the lawyer to handle the closing. 

Finalized details about the mortgage loan will then be given. This includes the loan terms, your projected monthly payments and the amount you’ll need to pay in fees and other closing costs. 

A Smooth Mortgage Approval Process

With increased regulation and tighter lending criteria, getting mortgage approval has become more complex. This is often an extremely time-consuming process. However, if done in a more precise manner, it can easily pave the way.

Being prepared and submitting all documentation will make for a smooth approval process.

And can help your mortgage broker advise you and make sure you’re getting the best for your hard-earned cash.

Mortgage Approval Process in Ontario, Mortgage Broker in Greater Toronto Area, Canada

Daisy Raouph, CLU, CHS, specializes in mortgage financing solutions and financial services. A Mortgage Broker and Financial Security Advisor with over 30 years of experience in financial services. Contact us today to review your mortgage financing options. We can help!