Once you start thinking about your dream home and you have enough to make the down payment, there is also another crucial element to consider, your mortgage. We know that it can be stressful when you are just waiting to hear back from the lender and find out if your mortgage was approved. Well, this process is slower than you might expect. That’s why many people wonder, “how long does it take to get approved for a mortgage in Canada?”. Here we will tell you everything you need to know.
A mortgage approval in Canada can take only a few hours or a few days, only if you have provided all the necessary paperwork. However, several factors can influence how long your mortgage approval takes, such as the standard timeline of your lender or bank. Also, it will depend on the loan you want and the property you are thinking about purchasing.
Then if we want to know how long it takes to get a mortgage approved. We need to look at all the main elements that can disrupt your timeline. We advise keeping these in mind before you start house hunting. That way, you can prepare for your mortgage application which will save you lots of time in the end.
How long does it take to get approved for a mortgage?
Even though you will only have to spend your hard-earned money on the down payment and closing costs, your mortgage is what will ensure you have the funds to buy the house. That’s why months ahead you must have a good financial status to get the mortgage approved as fast as you can.
Also, the amount you will have to pay every month will depend on the location of your property since the top regions are the ones that have the most expensive properties. To check out some of the best neighbourhoods for your next investment, go to Paradise Developments.
To give you an idea of what to expect, we will explain to you what happens when one of the main elements doesn’t meet the appropriate requirements and the benefits you will get if they do. Let’s get started.
Credit Score and Conditional approval
Your credit score is an element that will have a strong influence over how long it takes to approve your mortgage. This score will be calculated from the credit report, and it will reflect how committed you are to your debts.
From your credit score, the bank will decide if they approve your mortgage and the interest rate for your loan. If you have a good score and all the paperwork that is mandatory for the application, in 72 hours, you’ll receive conditional approval.
As its name suggests, conditional approval is not the final one. The lender will still need more paperwork to support all your information. After they have all the extra documentation, they will process the final approval of your mortgage.
There are some things you will have to do before you get the approval for your mortgage. First, you need to schedule an appraiser to fill an appraisal report. That way, the bank will know the cost of your property in the market. You will also have to buy an insurance policy. These last steps can add from two to three weeks to get the approval.
Then if you wonder, “how long does it take to get a mortgage approval?” The short answer is that even when you have all the paperwork and a perfect credit score, it could take a couple of weeks.
Missing documentation
If you are thinking, how long does it take to get approved for a mortgage in Canada, a great part of that answer will depend on whether you present the complete paperwork. Usually, lenders will not stand having incomplete paperwork, especially for a loan that is as big as a mortgage.
For instance, if your lender asks for the tax returns of the last three years and the day you submit your application, there is only one, they will not accept that. The lender will just ask again for the necessary paper until you send it.
You need to understand that they only ask for the paperwork they need to verify all your information and make a decision about your mortgage. To help you out, here is a list of all the papers that you will need.
- ID
- Employment history and certification
- A pre-approval for your mortgage
- Down payment
- Bank statements for the last three months
- A list of your assets and liabilities
- A copy of the listing of the property plus a description of it (including the address)
- A copy of the agreement to purchase signed
- The value of any investments or stocks you have
Depending on the lender you choose, they could ask for other additional documents, in which case you will have to prepare them and hand it over.
Credit history and financial standing
Your credit history is a crucial part of your mortgage process because it will not only determine the interest rate you will have to pay but also how much time it will take. If at the time you submit your application, you ask your lender, “how long does it take to get a mortgage approved?”. They will tell you that if all your accounts are in order, you will have an answer in a few days with conditional approval.
Having all your accounts in order might sound easy, but that means you can’t have any late payments. This counts for your credit cards and any loans you have. If you are reported late, but it’s a mistake, you will have to file a dispute. When you do, that account will have the tag of dispute, and likely until it is resolved, your mortgage process will be slowed down.
Pre-approved mortgage
If you asked a mortgage broker, “how long does it take to get approved for a mortgage?” and you didn’t like the answer, there is something you can do about it. You have the option to get a pre-approved mortgage, which will accelerate the whole process.
A pre-approved mortgage also will help you have an idea of the kind of properties you can afford. This information goes both ways because your lender will also know how much they can lend you.
In case you receive a pre-approval letter, you will lock your interest rate from 60 to 120 days. Also, keep in mind that the letter will show the maximum amount of your mortgage, but not necessarily the exact figure they will lend you.
Now whenever anyone asks how long does it take to get a mortgage approval, you will have the answer. Plus, you will also know when to start preparing financially and what the required paperwork is. In the end, just remember that the key is to be patient.
