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Mortgage Tips - How to Qualify for a Mortgage
When lenders are looking at your application to approve or decline your mortgage, they are all looking at the same kinds of things. They vary, at times, with the emphasis they put on different parts of your application, and your mortgage broker can direct to those lenders best suited to your own strengths and weaknesses.
The common areas that all lenders consider are listed here, and will each be elaborated on in future newsletters. For additional information or answers faster than that, call me with your questions at any time.
The Five C’s of Credit:
- Character
The lenders look for residence stability and income stability, especially over the last 3 years. Re-finance your mortgage before you switch jobs, not after.
- Capital
Lenders want to be assured you have the downpayment without borrowing it. To accomplish this they will need copies of bank statements ( not just bank books), receipts from RSPs, or a gift letter from someone giving you the money.
- Capacity
Lenders need to know your ability to handle the payments on the mortgage as well as continue handling any existing debt. Your Gross Debt (GDS  ) do not exceed 32% of your gross income. Your Total Debt Service (TDS ) must not exceed 40% of your gross income. The TDS would include any monthly payments on credit cards, car leases, or loans on any kind, heating costs, plus half of your condominium fees if applicable.
- Collateral
Lenders need to know that the property being mortgage has sufficient value in it to protect their investment in you. They need to know that if you walked away from your obligations, there would be sufficient value there to recoup their losses.
- Credit
Lenders will check your credit history. They are looking for a proven track record of having some credit, and using it wisely. Next month’s newsletter will deal with this topic in some depth.
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