Why Getting Pre-Approved is Like Packing for a Vacation (and Not Forgetting Your Passport)

Ah, homeownership! The dream of backyard BBQs, perfectly curated Pinterest décor, and the sweet satisfaction of never having to ask a landlord if you can hang up your 500-piece family photo collage. But before you start measuring the walls for that oversized sectional, let’s talk about the most crucial step in your homebuying adventure: getting pre-approved for a mortgage.

Think of it like planning a big trip. You wouldn’t book a flight to an exotic destination without making sure your passport isn’t expired, right? Well, buying a home without a mortgage pre-approval is a bit like showing up at the airport with nothing but a suitcase full of dreams and a driver’s license. It’s not going to end well.

Step 1: Verbal Income vs. Reality—A Special Message for the Self-Employed

Picture this: you confidently tell your mortgage broker that you make “around $100,000 a year.” Sounds great! You’re practically rolling in the money! But then we get to your actual documents, and… surprise! If you’re self-employed, there’s a good chance that the $100,000 you quoted was based on gross earnings—before expenses, write-offs, and some creative accounting that made sure Uncle Sam (or in our case, the CRA) didn’t take more than necessary. When we finally get to your net income, well, let’s just say it’s not at all what we were expecting.

Listen, we love optimism, but when it comes to mortgage pre-approvals, accuracy is the best policy. Your lender is going to check your documents anyway, so let’s make sure you’re looking at homes that truly align with your financial picture. A little preparation now means fewer surprises later—and a much smoother path to getting the keys to a home you’ll love.

Step 2: The Document Hunt – Like a Scavenger Hunt, But with Higher Stakes

Your mortgage broker will ask for documents like pay stubs, tax returns, bank statements, and maybe even a letter from your employer confirming you actually work there and aren’t just loitering around the breakroom for free coffee.

This is not the time to play hide-and-seek with your paperwork. The more complete your file, the faster (and less stressful) your approval process will be. You wouldn’t show up to airport security without your boarding pass, would you? Exactly. Hand over those documents like your homebuying future depends on it—because, well, it does. And just to clear the air—your mortgage broker isn’t some unruly dictator demanding endless paperwork for fun – trust me when I say this, this is the least liked part of the process. Every document request needs to be reviewed and verified.  That’s right…those 120 pages of Bank Statements we asked for (to confirm your down payment) must be reviewed in its entirety. Why? Federal Regulation demands that we confirm all large deposits due to anti-money laundering (AML) legislation. Thus, mortgage brokers are considered the middleman between you and the lender, trying to make sure you don’t get an unexpected “no” at the worst possible moment. Think of them as the friend who double-checks your packing list before you head to the airport—annoying in the moment, but a lifesaver when you realize you almost forgot your passport.

Step 3: Shopping Smart – Don’t Fall in Love with a House You Can’t Afford

We get it. You’ve found The One. It has the walk-in closet of your dreams, a kitchen that screams “I’m definitely learning to cook now,” and a backyard perfect for summer soirées. But hold on—if you haven’t been pre-approved, how do you know it’s actually within your budget? You don’t want to go through the emotional rollercoaster of mentally moving in, only to find out the bank says, “nice try.”

Getting pre-approved means you know exactly what price range to shop in, making the process smoother and more realistic. You wouldn’t try on a wedding dress before checking the price tag, right? Same rule applies to house hunting. The homebuying process is stressful enough—our job as mortgage brokers is to reduce any unexpected phone calls that could turn your happy “we got the house!” moment into an “uh-oh, we have a problem” moment. Trust us, we want your closing day to be full of celebration, not frantic last-minute paperwork!

The Moral of the Story? Be Prepared!

Pre-approval isn’t just a formality—it’s your golden ticket to the homebuying process. It saves you time, stress, and the embarrassment of having to call your realtor and say, “So, about that house I loved… turns out I can only afford a shed in someone else’s backyard.”

Let’s be real—the market is tough right now. Home prices aren’t exactly giving off “bargain bin” energy, and competition can be fierce. The last thing you want is to add unnecessary stress to an already challenging process. That’s where preparation comes in. By getting pre-approved and letting your mortgage broker steer the ship, you’re setting yourself up for success instead of disappointment. Think of us like your GPS for this journey—sure, you could wing it, but it’s a lot less painful if you follow the right route from the start.

So, future homeowner, take a deep breath, gather those documents, and work with your mortgage broker to get pre-approved before you start falling in love with listings. Trust me, it’ll make the whole process a lot smoother—and way less stressful. Now, go forth and house hunt responsibly! And remember, your Mortgage Broker should be your “best friend” during your homebuying experience.  They should be showing you their best communication skills and experience because buying a home should be one of the most exciting moments in your life.  The last thing any “good” broker should do is take a backseat approach to your homebuying experience.

So, you’ve found “that” home. You know the one – the charming yet slightly outdated gem with a kitchen straight out of the ’70s, pink bathroom fixtures that scream retro, and shag carpet that could use a serious update. At first glance, you might be tempted to run for the hills, but hold on a second! What if I told you that with a little creativity, a dash of humor, and a Purchase Plus Improvement Loan (PPI Loan), you could turn “that” home into your dream oasis? Yes, really!

Let’s face it – there’s something oddly charming about a home stuck in a time warp. Sure, the avocado-green appliances and floral wallpaper might not be everyone’s cup of tea, but instead of seeing them as drawbacks, why not embrace the retro vibes? With a PPI loan, you can transform outdated spaces into modern marvels while preserving a hint of nostalgia.

And those infamous pink bathroom fixtures – a relic of a bygone era. While some may see them as an eyesore, others recognize the potential for a stylish and unique space. Y you can bid farewell to the pink tiles and say hello to a spa-like oasis that’s as chic as it is inviting. Picture crisp white subway tiles, sleek fixtures, and luxurious accents.

A PPI loan can also help to “build” a basement suite for those who need a mortgage helper.  In some cases, we can use the proposed income from this “new” suite to make the mortgage more affordable; thus helping “would-be buyers” to qualify.  We all understand that with higher interest rates, affordability is a big concern.  And for some, making it difficult to enter the market. This creative solution may be the difference between buying a condo or a home.

So, how do you make this loan your secret weapon to transforming that dull, outdated ‘70s box-style home into your DREAM HOME?

This innovative financing option allows you to roll the cost of renovations into your mortgage, giving you the flexibility to customize your space without draining your savings. With one loan, you can purchase the home and fund the renovations, while enjoying the benefits of homeownership. There are limitations:

1. Quotes are required to confirm the type of work.
2. The buyer must do the work before funds are released.
3. An Inspection before to support the “new” market value.
4. An Inspection after to confirm work’s complete.

#1. Every Lender/Insurer will require quotes upfront.  Not only do the quotes confirm the type of work that is being done but they also confirm the value of the work.  Why is this so important you may ask? It is simple! The Lender will add the total cost of the work to be performed to the value of your purchase contract – effectively adjusting your lending value. Your down payment will be adjusted based on this new value. For example: You currently have an offer on a home for a purchase price of $500,000.  Your current down payment assuming 5% down will be $25,000.  Now, you decide to add approximately $50,000 (10% of the total purchase price) in home improvements. This effectively brings your new lending value to $550,000 with a new down payment of $30,000.  NOTE: any offer over $500,000 will require a down payment of 5% up to $500k and 10% on the balance.

#2. This part is EXTREMELY important: the lender and default insurer (CMHC) will demand that the work being proposed is the work that must be done. You cannot deviate from the proposed improvements. For Example: If you state you are upgrading your heating & cooling system but opt to do a bathroom reno instead then the lender will not advance the funds as originally approved in your application. Why is this so important? Simple, the lender/insurer approved the file based on specific conditions.  conditions that were supported by an inspection/appraisal to determine value. If you choose to do something different then this could undermine your application putting undue stress on your family.

#3. Appraisal Report before completion. As mentioned in #1, an appraisal is required to determine the “As is” value and the “as is complete” value. What does “as is” mean? The “as is” value is the value before any work is done. The appraiser needs to evaluate the home’s market value before any work is done.  Should the value come in lower than the offer then this could undermine your application. In most cases, the insurer will request this but there are the odd cases where the lender doesn’t require an appraisal upfront.  Additionally, the “as is complete” value represents the assumed lending or market value of the home when the reno project is complete. It would be assumed that every dollar spent would equate to a dollar gain in market/lending value but this is not always the case. This is why the insurer/lender will request this as it is their responsibility to ensure that the value is fully supported.

#4. Final Inspection Report when your project is done: This is the final step in what surely seems like a complicated application process. In all cases, a final inspection report is required by the original appraisal firm to validate the project completion (based on the quotes provided). This is the only way for a lender to ensure the investment/renovation cost is added to the overall value of the home.  If you remember from #2, the money cannot be released until the project is complete. The lender needs to confirm the work was done and the money invested into the property before they will release any funding.  So if you made the mistake of doing something different than quoted then the lender/insurer may withhold the funds entirely.

The criteria above may sound scary but understanding how the program works will prevent these unfortunate missteps from occurring. A purchase plus improvement loan has helped many clients find their perfect home – especially during a time of high market values.

Before you dismiss “that” home as a lost cause, consider the possibilities. With a PPI loan, you have the power to turn a dated dwelling into your dream home – one avocado-free kitchen, pink-free bathroom, and shag-free floor at a time. Embrace the possibilities, unleash your creativity, and get ready to fall in love with your own home.

Remember, the journey from “that” home to your dream home may not always be smooth sailing, but with a little humor and a lot of imagination, anything’s possible. So go ahead, make an offer, and get ready to transform “that” home into the stylish sanctuary you’ve always dreamed of.

Kari Gares

Mortgage Broker

It’s one of those times in everyone’s career where they ask themselves, “Why am I doing what I’m doing? Does anyone appreciate or understand my role and why it’s important to them?”

I don’t think anyone is really immune to these feelings of self-worth and acceptance. We all try to offer something of substance to our clientele. Something that speaks volumes to our role in our respective fields and Mortgage Brokering is no different. Sure, there are some that may say your job is easy. You get paid well so don’t question how people think or what they think for that matter. Just go about your job as the rest is irrelevant.

Well, these statements may be true for some but for many in the Mortgage Brokering field, we do take acception to these statements. Our job is not glamorous.   Many make average incomes but spend many hours trying to do so. We struggle with the stress of handling one of the largest financial transactions for the majority of Canadians. We are the frontline to ensuring these transactions happen. If there are glitches, we need to fix them. If our clients are stressed and feeling overwhelmed, we are there to help them. We handle many situations that are from both spectrums: from the happy 1^st time buyer who is just starting out in life to those families that are divided; from businesses being born to businesses being shattered; to clients celebrating a raise or the birth of child where expansion is needed, to clients downsizing as their children are starting life’s of their own. We don’t simple do just mortgages. As you can see, our role is expansive. We are the hand that is there to hold you thru anything. Granted, not all brokers fit this bill but many do. So, I ask the question: “What does a Mortgage Broker do”?

On general terms, a Mortgage Broker is there to provide guidance, experience, knowledge and is there to provide recommendations to their clients regarding their mortgage transaction. We help to facilitate the mortgage approval by gathering information that is pertinent to the transaction. The basic information is how much do you make? And how much do you want to put down on your property purchase? And, are you looking for the best rate? Easy questions, right? Anyone can do this?

Well, if mortgage brokers only asked these very few and very simple questions we would not be able to provide the client with a proper plan that takes into account much more. Our role is to gather as much information about them now and about where they plan to be in the future so we can determine the “best” plan that meets their individual needs. These needs are more than term and rate? We need to ask as many questions as possible so that we truly understand our client and their needs. I do not want to be a glorified paper pusher that has no care for their client or for their financial well-being. Now, this leads us to a better understanding as to why there is so much confusion around what we do.

The Banks have done a great job of spelling myths about our role. That we are the opposite to those things. Use a Bank because brand matters. Trust in what you know – trust in a logo hanging on the door, in a window and on a sign. That is the Bank’s motto. The ironic part of this statement is that Brokers provide close to 35% of the overall market share to the Bank’s business.

We also get to negotiate the best rate based on the client upfront. Have you ever wondered why a Bank offers one rate, a Broker offers another, and the original Bank then matches the broker’s rate? Is it odd to you that the Bank puts the onus on the client to demand better; whereas a Broker demands better upfront! We believe that every client should not have to worry about the negotiating side of the mortgage process. That is what we get paid for. Our primary goal is to facilitate the mortgage, build a long lasting client relationship so that we can guarantee future income by supporting those that make us successful – ie., a working wage to support our family! We have a direct interest in that transaction because that transaction comes down to the client. I worked for a Bank for many years. They too serve a purpose and that purpose is to make money for their shareholders while simultaneously building brand recognition. It is this Brand Recognition that brings clients thru their door and it is the same brand recognition that makes people believe they are being offered the best because loyalty must count for something.   It does and they will but you have to work extra hard to get it. A broker works harder to secure it in a faster and more productive way. So yes, on average, Brokers have the ability to secure better rates based on a specific product that is specific to the client and their needs; and the clients get to spend more time doing what they need to do which is work, raise a family, pick out new paint colours, or whatever is important to them. Brokers help you save time so you can spend more time doing the things that matter to you.

There is also a huge misnomer circulating out there that Brokers will cost you more with their astronomical fees and hidden agendas. We do laugh often at this statement but the reality is this inaccuracy was placed out there as a means to discredit us. It’s like a court case – reasonable doubt will prove your innocence. Reasonable speculation about costs will surely help those set on discrediting us win. In reality, very few deals have Broker fees attached. Those that do typically do not fit the “standard” mortgage financing policies. They could be self employed individuals that do not claim an income. They could be someone who has gone through financial upheaval in the form of Bankruptcies or foreclosures. It could be a business transaction or a private deal where we do not get paid direct by the institution that funds the mortgage. The ONLY time we charge is when we do not earn an income from the source (Lender), and more time than not the client is disclosed this fact upfront. Lawyers get paid for their time and energy. Realtors get paid for their time and energy. Even appraisers and home inspectors get paid for their time and energy; but why is it believed that Mortgage Brokers should be different. We work long days and sometimes long nights. We don’t take holidays because our clients need us.

We truly work 365 days out the year. We care beyond measure about what happens in our client’s lives. We have laughed with many. We have cried with many. We given hugs and comfort because sometimes that’s all we can do. We are not the Banks! We are people, humans dedicated to the well-being of every one of our clients. We strive for success but success isn’t always measured by how much we have but rather by how many we have helped.

I am Kari Gares, and am proud to be called a Mortgage Broker

Have you ever wondered why everyone keeps saying that if you are interested in purchasing a home, you should ensure you have obtained a Pre-Approval? It seems that everyone wants to weigh in on this topic whether they truly understand the benefits or not. I guess we have done a bang up job of preaching this statement for as long as I can remember that the majority of buyers ensure this is their first go to step. The problem with listening to everyone else, rather than your Mortgage Broker, is that the average purchaser may not necessarily understand the basic idea of a pre-approval.

Does a Pre-approval guarantee you a mortgage approval? Does it provide a rate hold in a potentially unstable rate market? Or, does it provide security in knowing what you can afford before you head out in the world looking for that perfect home?

Here’s the reality: a Mortgage Pre-Approval offers the buyer with a rate hold but of only one specific term. Many believe that you will have access to numerous terms and specified rates that will be guaranteed throughout the 120 days. This is why it is so important to discuss options, terms and products before deciding on what your pre-approved term will be. You want to ensure that you have the best term and rate secured when you find the home you wish to purchase.

The other misnomer with pre-approvals is that your financing is 100% secure. Unfortunately, this is not the case. Many Lenders do not review your personal information such as your income documents, credit history, down payment and more specifically, the property in question. Under a pre-approval, all the Lender sees is what your Bank or Mortgage Broker provide on the application. None of this information is validated until an offer has been secured. This is why it is so vital that your Bank or Broker follow through with the acquisition of important documentation. It is “our” job to ensure that we have obtained the necessary paperwork to show the Lender that our application contains validated information. Without this being done upfront, we go back to the first part – you truly just have a rate hold. This is why we always request for subject to financing to be placed on all offers (purchase contracts); if not for the documentation but for the property itself.

This leads us to a very important aspect of the mortgage process – what are you buying? What type of home? Does it have restrictions such as age? Is it a single family dwelling, strata/condo, mobile or manufactured home or how is it zoned? Many don’t consider these aspects of the financing process but for each property type, different mortgage approaches need to be addressed. Some will limit the length of amortization accessible based on the life expectancy of the home. Or, some will require CMHC (Canadian Mortgage Housing Corporation) insurance. Others will acquire a much higher rate than maybe what was originally placed on the rate hold. The aspect many realtors don’t understand or consider as well is what are the property taxes? Are there strata fees? Any time you add a liability to the debt servicing ratios, these values can adjust the qualifying amount a buyer can afford. Again, when a pre-approval is completed, it has made several assumptions! The bottom line is we, as Brokers or Lenders, do not know what type of home you will buy. We can only make assumptions, and therefore, adjust the pre-approval based on these assumptions. But like any assumption, these can change which can adjust the outcome of financing – either for the better or worse. In order to protect a buyer, we ALWAYS encourage them place a subject clause such as condition to obtaining satisfactory mortgage financing so that we have time to add or take away vital information on the application to complete a thorough review of the mortgage and property details. Thus, when a final approval is obtained, we have done our due diligence for the buyer.

In the end, a pre-approval is still a very important step in the house hunting process. It may not provide a guarantee approval but it does help the buyer to understand their affordability range. It ensures that the Broker or Lender is doing their job by asking questions that are pertinent to the buyer. We need to understand what it is they want or need before addressing mortgage terms or products. A great Broker or Lender will ensure that their comfort ability range has been addressed. It is one thing for a Broker to tell a buyer how much they can afford based on Lender guidelines. It is another for a Broker to address the personal budget of a potential buyer – thus creating a workable baseline for the buyer and for the realtor.

We strive to better ourselves and our clients by taking the time to follow through. We ask these questions and many more to determine what makes the most sense for our clients. Don’t just trust that your Bank has done all of this for you. If you have not supplied any information upfront, then it is safe to say that you have nothing more than a bonafide rate hold. Don’t be afraid to ask questions but please ensure you are asking those questions to the right people. Relying on what others tell you rather than a professional Mortgage Advisor may lead you to a less than desirable outcome.

Build dreams, Open doors.

Kari Gares
Okanagan Power Broker