Denied by the Bank

Denied by the Bank? Don’t Give Up!

calendarSeptember 19, 2017

peopleThe Mortgage Advisors

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With the recent changes to the Canadian mortgage landscape, including the first rate increase in nearly a decade and more stringent qualification requirements, more people will have issues getting a mortgage approval this year. And sometimes even those with excellent credit ratings and significant deposits are turned away. To find out why applications get denied by the bank and what you can do if your application gets rejected, read further as we provide some helpful tips.

Credit Score

Your credit history will be a big part of your mortgage approval success. If you have a low credit rating or have mortgage arrears, bankruptcies, recent debts, or overdue payments on the credit report, the banks will have grounds to reject your application.

New Credit Cards

Opening a new credit card and adding a significant amount to the balance can and will affect your mortgage approval. New debts will impact your total affordability and show banks that your financial status is unstable.

Total Income

Lenders want to ensure you can afford the monthly mortgage payments well into the future. If you cannot prove significant income over a two-year period that meets their requirements, you may be denied. Steady and secure income can provide proof that you make enough money to cover the mortgage now and forthcoming.

Down Payment

The overall saved down payment will also be an important part of the mortgage approval. Where the standard conventional mortgage down payment is 20%, even if you have this amount saved there’s still a chance you may not meet the qualifying requirements that were recently changed. However, the more down payment you have, the better your chances.

Closing Costs

Even if you prove that you can afford the down payment and monthly mortgage payments, the bank may still reject your request if they believe you’ll have difficulties affording the closing costs. Many lenders require that you have enough money for both the down payment and closing costs saved in your bank account when applying for a mortgage. Providing proof of available monies will be a crucial step in the approval process.

Property Condition

Another key factor to consider is the property condition. Your lender will want to see an appraisal report that outlines the condition of the property and current market value. If it’s a rental space, there may be other conditions that need to be met first. If there are structural issues found, or location concerns then the bank may think twice about lending to you. Also, if there are conditions in relation to title or condo strata for instance these may also affect the purchase. If you find yourself denied, don’t fret. Your mortgage broker has access to many lenders with different guidelines than standard bank lenders. If you find yourself in a situation where you’re struggling to get approval and are denied by the bank, talk to the Mortgage Advisors today.  
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