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Applying for a mortgage loan is a thorough process that requires an in-depth financial audit. After choosing a lender, borrowers should get their application in order and the best way to do it is by using a checklist.

A succinct checklist can help you procure and organize all the different documents you will need to get. This will help your application avoid rejection due to missing information.

Here’s a checklist you can use for an upcoming loan application:

Employment Documents

You will need to submit a recent pay stub or pay stubs. All employment documents should be written and signed by your boss or the human resources department. It must be within 30 days of your application submission and detail your position, seniority, salary, hourly rate, average number of weekly hours and whether you’re a full or part-time employee.

Seasonal and part-time employees might need additional documents to verify their income.

Property Documents

You will require the following with respect to the property you want to buy:

• The mailing address of the property
• Proof of down payment
• Signed mortgage agreement
• Sales contract outlining the offer
• Listing and legal description
• For condo purchases, you will need a declaration, condo fees, and all documents pertaining to the health of the property
• Lawyer’s contact information

Asset and Liability Ledger

You will need to provide the lender with all your financial information. Your bank should be able to issue these documents and most people can access it via their online banking account.

You will need to provide a list of your assets and their value, and a list of your liabilities including total amount and repayment terms.

For your ease, here’s a checklist you can copy and paste and use as you prepare your application. Remember, variables exist depending on the lender, your financials and the loan amount. In addition, the lender can request additional documents.

Checklist:

• Personal information (full name, date of birth, SIN, contact info marital status, dependents, current address)
• Pay Stubs
• Letter of Employment
• Mortgage Pre-approval (if applicable)
• Bank statements
• Value of RRSPs
• Banking info
• List of assets
• List of liabilities
• Credit score
• The mailing address of the property
• Proof of down payment
• Signed mortgage agreement
• Sales contract outlining the offer
• Listing and legal description
• For condo purchases, you will need a declaration, condo fees, and all documents pertaining to the health of the property
• Lawyer’s contact information

Loans are risk-adverse financial endeavours, especially with respect to the lender. The most favourable applicants have stable incomes, assets, a positive credit score and history and haven’t endured financial hardships like bankruptcy or debt consolidation.

If you’ve experienced financial complications, you could still be eligible for a loan whether it’s to buy a home, start a business or to improve cash flow. Here are a few tips if you are applying for a loan following some financial hardships.

Credit History vs. Credit Future

Lenders use credit score and history to get an idea of how you’ve managed previous and outstanding debts. A credit score is the most comprehensive way for a lender to learn what kind of borrower you are.

Apply for your credit score and if it’s low, then take a few months to improve it. This means paying your bills on time, trying to completely pay off a few debts and considering options like consolidation if it can improve your situation.

Assets

Financial hardships can stem from losing a job, switching careers, paying for post-secondary education or from unforeseen medical expenses. While hardships can make a dent in your present and future finances, it doesn’t mean you are a bad candidate for a loan.

If you have assets (property, businesses, investments, etc.), then they could outweigh any financial issues you might be facing. Don’t assume you will be denied a loan.

Loans to Handle Financial Hardships

A loan can help a borrower weather the financial hardships they might be experiencing. There are loans specifically geared towards increasing cash flow or repaying large debt loads. It’s not a bad option to consider a loan for this reason. A lender could be more willing to approve a loan for this reason as oppose to others like buying a property.

Every situation is different. Speak with a lender and let them guide you as to your available options and might be your best course of action. Contact us today and we’d be happy to answer your questions.

When the mortgage rate shifts even the slightest, the shockwave can reverberate throughout the housing market. There is also a potential ripple effect that can impact the job market and the provincial and national economy. Don’t treat mortgage rates as some boogeyman lurking in the closet waiting to scare you. The best advice is to understand what determines mortgage rates so you can forecast, predict and plan with greater ease and assurance.

Let’s review the factors that determine the mortgage rate to make sure you are prepared for whatever is going to happen next.

Economy

A common misconception is that The Bank of Canada sets the mortgage rates. As one of the nation’s most influential institutions, The Bank of Canada determines the overnight rate. Banks use the overnight rate to set their prime lending rate. The Bank of Canada helps stimulate the economy or deal with inflation, both of which could determine mortgage rates.

Since the Bank of Canada is tasked with safeguarding the Canadian economy and providing the overnight rate, the economy plays a distinct role in determining mortgage rates even if it’s at a very high-level.

Purchase Details

The down payment, the location of the property, the price of the property and the loan amount will all factor into determining your mortgage rate. A lender must review the details of the purchase to calculate which rate would apply to your loan. One example of this is that a higher down payment could result in a lower interest rate because a lender sees the loan as less risky.

Credit Score 

Certain factors that determine your personal mortgage rate are out of your hands. Your credit score, though, is a way for borrowers to exercise some control over how much interest they pay on their mortgage. This is based on your history of accruing and repaying debt and tells lenders how much risk is involved with a mortgage application.

A positive credit score means you could possibly receive a lower mortgage rate. A poor credit score means you might have to pay a higher rate to offset the risk.

Contact us to learn more about mortgage rates or to start your pre-approval process.

There are many steps involved in buying a home, not the least of which is securing a mortgage. While this is standard for most people as they seek to buy their first home or move to another home, some owners might need to apply for a second mortgage. That means, in most cases, that they want to take out a mortgage on top of the primary mortgage to pay off debts or make a large investment, which can include post-secondary education or starting a new business.

Why Apply for a Second Mortgage?

A second mortgage is also commonly known as a home equity loan. It may seem helpful to have this option to manage complex financial matters, but it is important to not enter this arrangement lightly. For some, despite taking on more debt, it can actually help improve your credit score if you use the money for debt consolidation.

Getting Approved

It may not always be possible to get approval from a financial institution in the first place. The interest rate is usually higher and there are often penalties for defaulting, so experts recommend comparison shopping both of these factors. Still, interest rates on second mortgages are usually lower than credit cards.

Be Prepared for Fees

Each financial institutions or lenders will charge different closing costs and fees. As a result, find out in advance what these parameters are so you can create a repayment plan. Qualifications for a second mortgage are first determined by the value of your home and its equity. Income and credit history are important, but not major factors like they are with most other loan applications—including a primary mortgage.

Value for Borrowers

There is greater freedom with a second mortgage compared to other loans. In fact, borrowers can often negotiate the terms and as much as 85% of your property’s value can factor into the amount you can receive. However, not everyone will provide this option as it is riskier for the lenders. That is because, if you happened to default on your loan payments, your primary mortgage lender would be paid before your second mortgage lender.

If you are considering a second mortgage application, contact us to help you ensure it is the right move.