One of the major concerns for first time buyers hoping to enter the GTA housing market is: Will we be able to afford it? Homes all over the Greater Toronto Area are in high demand, and prices are climbing ever higher. The average price of a home in Mississauga at the end of 2016 was approximately $670,184, according to MLS^® data, and the average number of days a house stayed on the market was only 18 days. In Toronto, where the average price of a detached home is now $1.2 million, the average number of days on market was 23, and most sold for well over asking price. So it’s easy to see that buyers need to be ready and able to move on a property they’re interested in as quickly as possible. Having home financing documentation prepared before looking at houses on the market is not only preferable, it’s essential.

Get a Pre-Approved Mortgage

A pre-approved mortgage is a piece of paper from your lending institution that promises to give you a mortgage worth a certain amount of money. The number on this paper is the upper limit of your available price range, and it’s important to have this information before you begin your search for a home.

But even before you obtain the pre-approved mortgage, you have some work to do! First, check your credit rating online through a credit agency such as Equifax. Unless your score is higher than 700, you may find it difficult to obtain a standard loan. If your score is not high, take steps to improve it. (And the same goes for your spouse.) The better your credit score, the better the magic number on your pre-approved mortgage will be.

When you go to apply for a pre-approved mortgage, you will need to have certain documents with you, and be able to answer a number of questions. Bring documents such as:

• Photo ID
• A record of employment income such as a paystub, T-4 slip or a personal income tax return (if you are self-employed, at least two years of Personal Income Tax Returns and Financial Statements).
• A letter from your employer stating the length of employment and current salary.
• The account numbers and locations of your bank accounts and investments.
• A list of assets, such as: vehicles, investments and interest income, RRSPs, jewellery, other real estate holdings.
• A list of liabilities, such as: existing loans or mortgages, credit card balances, lines of credit, liens, child support obligations.

To help you calculate what your household’s ability is to carry a mortgage, go to the Canada Mortgage and Housing Corporation’s website and use their interactive tools.

Down Payments

Normally, buyers must have from 5% to 20% of the purchase price in cash for a down payment on the home. The more money you can put into your down payment, the lower your mortgage payments will be. If you are a first time homeowner, you will only be required to produce 5% in order to get a down payment. However, there may even be a way to pay no money down, and to roll that payment into the mortgage. If your savings aren’t significant, ask your real estate broker if you qualify for this type of consideration.

Home financing in Mississauga doesn’t have to be a hassle. Speak to a financial institution about your options as a first time homebuyer and you will feel much more confident in your search!