What Your Mortgage Broker Wishes You Knew

Disclaimer: This article on mortgages in Ontario is intended for the purpose of providing information only. It is to be used only for the purposes of guidance. This article is not intended to be relied upon as the giving of legal advice and does not purport to be exhaustive.

Buying your next home means tapping into a team of professionals – such as your realtor, real estate lawyer and mortgage broker. Each one has an important role to play. 

At Beeksma Law, we build relationships with talented real estate professionals who understand the value of collaboration. We work closely with mortgage brokers who share our commitment to providing exceptional service and personalized attention to clients.

We recently spoke with Jacob Renshaw, Mission 35 Mortgages. Customer service driven and detailed focused, Jacob helps his clients navigate the real estate market, take control of their purchase or refinance, and achieve their financial dreams. We appreciate him sharing his expertise with us and have summarized the top takeaways below. 

Whether you’re looking for your first home or buying property to build wealth, you must find the right professionals to make it happen. Book your consultation with our team today.

a broker giving someone paperwork to sign for their mortgage in ontario

It’s never too early to start talking to a mortgage broker.

You may not yet be in the market for a home, but that does not mean you should hold off on talking to a mortgage broker. 

Even if you’re not currently prepared to purchase a home, engaging in a conversation with a mortgage broker will provide you with a clear understanding of your financial needs and enable you to take any necessary steps to get ready.

This process helps identify areas for improvement, such as credit building or increasing income, which may be crucial for a successful mortgage application. Don’t leave yourself in limbo; start the pre-approval process as soon as you consider entering the housing market.

Prequalifications and preapprovals are different.

Too often, these phrases are used interchangeably, but the reality is that there are some critical differences between the two. 

A pre-qualification will typically ask some basic questions and provide a generic response. Many first-time home buyers will use this information to begin their search for their home. While this is a useful starting point, it should not be fully relied upon. 

A pre-approval goes a step further by involving a thorough assessment of your financial background. It includes a detailed review of your income, credit history, and debt-to-income ratio. With a pre-approval, you receive a more accurate and reliable estimate of the mortgage amount you qualify for, which gives you a stronger position when making an offer on a home.

Interest rates are less important than you think. 

A lot of what we hear about mortgages in Ontario as it relates to the rates. Will the rates increase? Should I go with a variable or fixed rate? 

The current instability in the financial landscape is holding many people back, even amongst pre-approved buyers with excellent financial standing. 

Remember, the interest rate alone doesn’t determine everything. Sure, it’s tempting to focus solely on that percentage, but what really matters is the payment itself and how it fits into your overall financial situation.

Looking solely at the rates means you miss out on the larger picture. For example, a lender may approve you for a certain amount, but does that mean you can actually afford it? 

It is better to employ a payment and budget-based approach. Can you comfortably afford that mortgage? It’s not just about what’s possible but about what’s prudent for your financial well-being.

So, instead of fixating on interest rates and hypothetical crashes, let’s shift our focus to what truly matters: affordability. Can you comfortably afford to buy a home in the current market? That’s the question you should be asking, not whether rates will rise or fall. After all, rates will fluctuate throughout your lifetime, but your ability to afford a home matters most. 

Don’t start furniture shopping yet!

While we understand the inclination to begin shopping for new furniture for your new home, hold off for now! 

Do not take on any new debt, and avoid adding to your existing debt. Your lender has based its decision on your current financial situation, including your debt-to-income ratio. Additional debt can negatively impact this ratio and jeopardize your mortgage approval. 

Your lender will not hesitate to revoke your approval if a change in your financial situation causes them concern. To ensure a smooth transaction, focus on maintaining financial stability and making timely debt payments. 

This also applies to accepting a new job offer, even if the new job starts after your closing date. Your lender will typically contact your employer for a final employment verification check right before closing. If they discover that you’ve given notice or have plans to switch jobs, it can throw a wrench into things. It’s best to hold off on any job changes until after closing. That way, you can confidently transition without risking your mortgage deal.

You have (really good) options – even if you’re self-employed.

Getting a mortgage from a traditional lender, such as a bank, can be more difficult if you are self-employed. Newer businesses are especially affected, although you are more likely to be approved if you show at least two years of consistent income. Another obstacle entrepreneurs face is that banks typically only consider your net income rather than how much revenue your business generates. 

Alternative lenders usually take a different approach and look at your T4A, which shows your gross income. Alternative lenders can be a solid option for entrepreneurs, as they will operate differently from a bank and have a niche client they want to serve. They can have tailored products specific to your situation, and your mortgage broker can help you find which option is right for you. 

A mortgage broker can give you more.

While you may approach a mortgage broker to help you secure a mortgage, the truth is that they can be so much more. As early as the application process, your mortgage broker will look for opportunities you might not have considered. 

Each mortgage broker will bring their own expertise and experience. For example, Jacob is passionate about helping people to build wealth. His goal is to go beyond your initial expectations and open your eyes to the possibilities that exist in the world of real estate investment.

Securing a mortgage is more than just a transaction—it’s part of your financial journey. A mortgage broker invests in a personal connection with you. They take the time to understand your financial situation, goals, and dreams of homeownership. Picture them as your knowledgeable guide, offering tailored advice and support every step of the way. With open lines of communication and trust, the broker becomes your partner in this exciting journey, ensuring you feel confident and informed throughout the process.

Building a solid real estate team with Beeksma Law

At Beeksma Law, we pride ourselves on offering expert legal advice for all your real estate matters and fostering reliable industry connections with other professionals, such as mortgage brokers. Our team is dedicated to providing comprehensive support and guidance throughout your real estate journey

With our strong relationships within the industry, we can leverage valuable resources and networks to ensure your needs are met efficiently and effectively. Whether buying, selling, or dealing with any real estate transaction, trust Beeksma Law to be your trusted partner every step of the way.

Leave a Reply