“I’m planning on Buying a Property with Cash. Should I get Pre approved for a Mortgage Anyway?”
My usual more detailed type answer: It’s always a good idea to have a backup plan and know how much wiggle room you have. Being in a position to buy a property outright without a mortgage is a great position to be in but things may change for you before you get into that property.
There is a fairly large period of time from the time you start looking at properties to when you move in. Usually a couple of months. During that time there are many decisions made and information revealed with regards to the property. You may end up deciding that it is worth a tiny mortgage or line of credit to get a certain place that is slightly more expensive than what you had saved up for or perhaps you find a place that you can afford but it needs some renos done to it so that it suits you better. Similarly, the inspection may reveal something that you will want to get done fairly soon . Knowing that you have the backing of a mortgage as a ‘just in case fund’ will make the whole process easier and reduce a sense of restrictions. Better to get the pre approval before the serious house hunting as the good ones tend to sell fast and when you see the right one you want to be able to snatch it without having to second guess your finances.
There are of course life’s other factors like illness in the family or a change in your income or any number of things that may make the bank account wane a little before it’s time to pay that big bill. Best to make sure that if something like this happens it is not going to derail your home buying plans. This is especially important if you have arrived at the stage of negotiations and contracts.
Last but not least is the fact that what you owe in property transfer tax, Lawyer’s fees and other costs may not be quite what you expected. Mortgage Brokers take all these into account as well and you will be able to preview the real cost of a property more accurately before you go shopping.