When looking to purchase a home in beautiful British Columbia, there are several steps in the home buying process.

And if you’re like the majority of first time home buyers or even well-versed real estate investors, you’ll need a mortgage to purchase the property.

Having the right documents to get pre-approved for a mortgage will help you have productive meetings with mortgage brokers or lenders. This will ultimately benefit you in your home buying process.

By the end of this blog, you’ll understand the information you’ll need to prepare in order to have a pre-approval for a mortgage in British Columbia. So you can find your next home in Metro Vancouver.

Disclaimer

The information contained in this content is general in nature and businesses/persons should consider whether the information is appropriate to their needs. Legal and other matters referred to in this article are based on Metro Vancouver Lifes’ interpretation of laws existing at the time and should not be relied on in place of professional legal advice. Please consult with a mortgage professional on the full details and advice for mortgage pre approvals.

Table of Contents

What is a mortgage pre-approval?

A mortgage pre-approval is when you are pre-approved for a mortgage by a lender or mortgage broker. This is required to secure the mortgage.

Once the lender pre-approves the loan, there is typically a 120 day period where the lender will commit to the mortgage amounts and interest rates while you shop for properties.

The Importance of the pre-approval process

Stanley Yu, from Peak Mortage Company, provides some expert advice on the importance of having a mortgage pre-approval:

“The pre-approval process determines homebuyers for a specific borrowing amount based on their current financial situation and can also lock in a rate for typically 120 days. Getting preapproved is a critical first step I highly recommend for all homebuyers, whether for first time home buyers, investors, or even someone who is looking beyond a year from now. The process will help prepare, budget and set a realistic price point of what they can comfortably afford.”

The mortgage pre-approval process

The process for a pre-approval on a mortgage in British Columbia is quite straightforward.

First, you’ll need to meet with a lender, such as a reputable bank, or work with a mortgage broker who will help facilitate rates and amounts from different lenders.

During the meeting, you’ll provide them with the required documents and information they request.

How long does it take to get pre-approved on a mortgage?

Typically, pre-approval for a mortgage can take anywhere from several hours to a few weeks. This is dependent on the lender and situation with documents and details that are provided in the process.

It’s common for the broker or lender to inform you on the status of your pre-approval quite soon after the information is reviewed.

Documents needed for a mortgage in British Columbia

Outlined below are the main and common documents and information that you’ll need to have ready. Though be prepared, there could be other smaller details and information the specific lender or mortgage broker will ask for, in addition to what is discussed below.

General Information

Personal Information

These types of details will include your age, what you do for work, marital status, and other information that may be required by the lender. They ideally want to verify that you are who you say you are.

Financial Information

Credit history search consent

The mortgage lender will want to have consent to run a credit report of your credit history. This will help determine your creditworthiness and the associated amount they’ll let you borrow. As well as assist in determining the interest rate on the mortgage they will charge.

Current financial state

The current financial state can include documentation around your current account balances, the branch information, investments information and other basic financial information. Monthly income versus expenses may also be evaluated to make sure you can afford the mortgage you’d need.

Current debts information

If you have any debts, the mortgage lender will know all the details around that so they have a full-picture view of your financial situation. Specifically, they want to calculate the debt to service ratio.

Debts that they’ll want to know can include:

  • Credit cards,
  • Lines of credit,
  • Personal loans,
  • Payday loans,
  • Auto loans,
  • Boat loans,
  • Student loans, and
  • Other types of loans and debts.

Down payment source information

There are various ways to accumulate enough money for a down payment. This can be through personal savings, a lump-sum gift of money, RRSP withdrawals using the First-time Home Buyer’s Plan, etc.

You’ll want to document this source of funds. Specifically, if you have savings and investments, the lender will want to see statements for the previous 90 days.

If money has been received as a gift, there will need to be a letter to accompany the funds to prove that it was indeed a gift.

Overall, the lender will want to know that the down payment source will not need to be repaid. Or if it will be, then this will need to be calculated into their ability to lend.

Proof of Income Sources

Salary

If you’re a salaried employee, the lender will want to verify the sources of your salary and income through various sources. This can include:

  • T4 and T4A slips,
  • Several of your previous paystubs,
  • Personal income tax returns,
  • Tax filings, Notice of Assessments, and
  • A signed letter from the employer verifying this information.

The lender may also want to see dated bank account statements to verify the salaried amounts that the above documents detail.

Contracts for the Self-employed

If you’re self-employed or receive contract income, the mortgage providers will want to see how much you’ve made. This will be determined through various tax filings and documents, such as the Notice of Assessment. This may be verified through other documents such as a T1 General tax form from the past two to three years (and sometimes further).

Other income

If you have other sources of income, such as investment income, pension income, rental income, part-time work, or other income, you’ll want to be prepared to have documentation of that. It may help to have that extra income properly filed for getting a home mortgage.

Property Information

Given that you’re going to be purchasing an important asset, the lender will want to know the details of the property you’re planning on buying. This can include:

  • The MLS Listing and information associated with that.
  • Estimated fees associated with the property (Strata, Property Tax, Utilities, etc),
  • Property address,
  • Past home insurance costs,
  • And more.

Other Property Information

If this isn’t your first property you’re buying, the lender will want to know information on other properties you own. This could include information like:

  • Addresses of all other properties owned,
  • Mortgage information and amounts for those properties,
  • Other secured lines of credit, such as a home equity line of credit used to secure property,
  • Any rental or lease agreements if the properties are for investment purposes,
  • And possibly other smaller details.

After You Receive a Mortgage Pre-Approval

After you’ve received the mortgage pre-approval, you’ll be ready to work with a real estate agent and find the right property for your budget. The right agent will help you narrow down your search to fit the budget, while prioritising your wishlist for your dream home.

With the mortgage pre-approved, the lender will typically honour the loan amount and interest rates they provided anywhere from 60 to 120 days. This will give you plenty of time to search for a home.

Talk With a Mortgage Professional

If you’re interested in getting pre-approved for a mortgage, it’s best to talk with a trusted mortgage professional and broker. They will help you get the best rates and provide professional advice for navigating the home lending process.

“A mortgage professional will explain the different products and policies to help find the right mortgage and not simply quote generic interest rates. I always tell my clients “interest rate is just a by-product of your mortgage”. The most important thing is getting a mortgage that works for your circumstance”, says Stanley Yu.

Also, Stanley recommends using your personal network, “ask for a referral from people you trust and do your due diligence.”

Other Expert Tips From Stanley Yu

Headshot of Stanley Yu

When it comes to getting a mortgage pre-approval, he suggests to “start early! This will help you set expectations and prepare what is required. The worst feeling is when you have your heart set out for the dream home and not getting the mortgage approved.”

Stanley mentions that you should “talk to your mortgage professional before you start looking at properties.

A common misconception is that mortgage brokers only offer private lending. In addition to private lending, our access also includes banks and credit unions (A lenders) and alternative lenders (B lenders).

Mortgage brokers are licensed professionals dedicated to helping you find the right financing options. We are a one stop shop for mortgage solutions!”

Other Mortgage Pre-Approval Resources

Mortgage Affordability Calculators

Online mortgage affordability calculators can be a great way to get a rough estimate on the mortgage amounts and interest rates. Each one may have different variables, so it’s recommended to check out a few and see what you get.

Remember, take these with a grain of salt. We always suggest speaking with a professional for a mortgage.

Mortgage Qualifier Tools

The Government of Canada provides a mortgage qualifier tool to give you some guidance on if you could qualify for a home loan. They incorporate mortgage stress testing as a guide for qualifying for a mortgage loan, which can be useful information to know.