Getting approved for mortgage is not as simple as it looks like. It’s not like you pay the deposit, fill out a form and you’ll be handed over with the amount.  There is a lot more in this process, from the past few years lenders have changed the criteria of granting mortgage.  In addition to all the paper work and legal formalities following are some points that lenders are looking for in their clients.

  1. Ability to pay back

The first and most important thing that lenders look for in their clients is their capability and financial position to pay back the mortgage not for the first year but during the whole mortgage term.

This can be done by showing your lender the record of your savings and monthly income, to make sure that you can easily manage the mortgage amount not just in the form of monthly payments but also in situation of higher interest rate.

When you’ll get your mortgage and move into your home, you won’t need rent and your savings. You can spend that amount in paying back your mortgage and it won’t be a problem.

Your rent and saving amount will increase the stress test amount of your mortgage (this is the monthly payment you sign up for initially with a couple of percent theoretically added to see if you can still meet your repayments if interest rates rise).

  1. Bank Statements

It is important for you to formulate a bank statement of your credit card’s last six months and this statement should present a positive image of your financial situation.

In order to have a stable credit history and bank statement you have to make a budget and strictly follow it. You can maintain a good score only if you keep a check on your expenses and savings. Avoid spending on your additional luxuries for some time to maintain your credit report.

Your statement will show that you can take the responsibility and you are capable of saving and paying your money in an appropriate manner.

There’s no need to volunteer for a rent increase – but you should make sure to boost your savings as much as possible if you want to maximize your mortgage.

You should keep in mind that your rent and saving amounts are clearly mentioned on your bank report. You’d be surprised at how many people still make these payments in cash. By doing this they miss out on showing their lender how much repayment capacity they have.

  1. Credit History

Lenders will definitely like to consider your credit history. They would like know about your current loans and your capability of paying them back.

Your lender may check your credit report from Canadian Bureau. If you want to know where you stand you can check your report as well.

  1. Report your Income

If you are an employee your lender will like to see your six months pay slips. Further you may need an application signed by your employer to confirm what you earn and that you are a permanent employee.

If you get any bonuses on your income you have to show them in written form as well. If you are a business owner you’ll have to show credit history of your last three years.

  1. Tax History

You have to show your tax history as well. Self-employed clients need to show their accounts history to make sure that their tax payments are in order.

Apply for Mortgage

If you need any kind of information regarding mortgage you can check out our first-time home buyers’ plans and other plans as well.

You can also use online mortgage calculator to find out how much you can borrow. And you can consult our mortgage specialists at any time.

Avon Financial is available for guiding its customers throughout the mortgage process.

Contact us:  info@avonfinancial.com
Ph:905-216-5563

Benefits of a Mortgage Broker
Why Avon Financial
Mortgage Glossary