Mortgages in Ontario

How is a decision made?

Lenders look at five key factors when evaluating an application:

Income - A lender will look to see if your income is sufficient to pay the mortgage payments as well as keep up with all your other obligations, such as car payments & loan payments.

Debts - A lender will look at the amounts of your debts, versus the amount of your income.  Also, certain debts are looked upon more favourably than others.  For example, credit cards or lines of credit are fine, as long as they have been paid as agreed.  Credit from Finance companies tend to be a less favourable type of credit.  Try to avoid borrowing money from too many different finance companies.  They generally have very high rates of interest and are usually associated with "Don't Pay for One Year" sales at many retail stores.

Employment - A lender will look at your employment history.  They like to see stable employment for at least two years.  Work in the same industry or time spent in training, such as Doctors or Lawyers may be considered as stable employment.

Credit -  This is the single most important factor when applying for a mortgage and it will determine the interest rate that you receive.  If you have proven in the past that you can handle credit responsibly, you pay your bills on time and don't over-extend yourself, you likely have a good credit score and will be rewarded by receiving a better interest rate.  If you have struggled in the past, lenders may see you as higher risk and will charge a higher rate in relation to the risk.

Property Value - The value of the property is an important factor in the approval process.  The lender will look to see that the purchase amount is reasonable for the type of property and it's geographic location.  Also, many lenders prefer to lend in densely populated areas where property values continue to rise and the properties sell quickly.

If one of the categories listed above is not at the level that the lenders would like to see (ie. credit history or employment history), we can focus on your strengths in other areas to get a mortgage approval for you.