Being declined for a mortgage can be quite disheartening, especially when you consider all of the hard work that goes into applying for one in the first place!
Understanding why you were declined allows you to recognize certain areas of your finances that can be improved. The good news is that just because one lender says no doesn’t mean other lenders will also decline you.
Often, your application can be rescued by working with an experienced mortgage broker who has access to many different lenders and all 3 insurance companies currently available in Canada. Thankfully, every lender has a different policy on what is and isn’t acceptable to them, and many even specialize in certain areas. So, just because one lender has turned you down, doesn’t mean there isn’t a lender out there for you.
Based on many years of mortgage underwriting experience while working with the banks for 20 years and as a Mortgage Broker for the last 16, I am now seeing an increasing number of declines due to all of the government mandated changes to the mortgage lending rules.
Here are just a few differences I have recently seen that distinguishes one lender from another:
- The borrowers are a bit over their maximum debt servicing limit. They don’t have any additional cash to put down but they are paid the Child Tax Credit each month for their 2 kids that are under 15 years old. I got them approved with a lender who will include that type of income in meeting debt servicing requirements
- A client pays spousal and child support each month totalling $1100. When I included this payment under total debts along with his car payment, the debt servicing was too high. I took him through a lender who will allow that $1100 per month to be deducted from his income instead which meant his gross debt servicing is now under 44% which meets the lenders guidelines.
- The borrowers buying a home to owner occupy have decided to keep their current residence and turn it into a rental property. They went to their bank who told them, even including potential rental income, they can’t meet the debt servicing guidelines. I got them approved with a lender that recognizes 80% of that rental income instead of just 50%
- Self-employed clients often do not take out significant personal income from their businesses if they don’t need it just to pay higher income taxes. This means a good number of business owners don’t qualify at the purchase price they would like to buy at. I can work with a lender who will allow “addbacks” to the borrower’s income. Eligible addbacks can be business use of home, amortization/depreciation and capital cost allowance.
- I had a common-law couple apply for a mortgage and his credit was not good so he couldn’t be on the mortgage. Her income was high enough to buy the home in her name only, however, he is the one who had been saving the down payment funds in an investment that was under his name only. Their bank told them the “gift” funds could only come from a close family member and they did not consider the common-law spouse as a close family member. I got them approved by taking them through a lender who allows “spousal” gifts
- A client came to me who wanted to refinance his current mortgage at renewal to pay off some credit card debts. His credit report showed one credit card that was $10 over limit so his credit score had gone down to 665 and his mortgage holder declined him because their minimum credit score requirement for refinances is 680. I took him through a different lender who will refinance with credit scores as low as 620 and the rate was actually lower than what his current lender had available
If one of these situations sounds like what you are experiencing then contact the MortgageGirlca today and put her over 36 years of experience to work for you! #Benefitfromexperience Call: 780-433-8412 Email: firstname.lastname@example.org Website: www.mortgagegirl.ca Follow her on Facebook (MortgageGirl.ca) Twitter (MortgageGirlca) Instagram (mortgagegirl.ca) or follow her blog (mortgagegirls.wordpress.com).