It’s not just because of finances.

As a mortgage broker I receive calls from people who want to know how to qualify for a mortgage. Most of the time it comes down to finances but there are other reasons as well.
Here are the 5 most common reasons why your home mortgage loan application could be denied:

1. Too Much Debt

When home buyers seek a mortgage, the words “debt-to-income ratio” quickly enters into the vocabulary, and it’s not without reason. Too much debt is a red flag to lenders, signifying you may not be able to handle credit responsibly.
Lenders will analyze how much debt you carry and what percentage of your income it takes to pay your debt. Debt ration is just as important as your credit score and payment history.
Two affordability ratios you need to be aware of:
• Rule #1 – GROSS DEBT SERVICE (GDS) Your monthly housing costs are generally not supposed to exceed 32% of your gross monthly income.
• Rule #2 – TOTAL DEBT SERVICE (TDS) Your entire monthly debt payments should not exceed 42% of your gross monthly income.

If you don’t have a good debt to income ratio, don’t give up hope. You have options available including lowering your current debt levels and working with your Dominion Lending Centres Mortgage Broker.

2. Poor Credit History

Some people don’t realize if they are late on their credit card/loan/mortgage payments the lender sends that information to the credit bureaus.
• Late/non payments on your credit report will make your score drop like a rock
• Exceeding your credit card limit, applying for more credit cards/loans will lower your score.
• Bankruptcy or Consumer Proposal will significantly impact your score, and stay on your credit report for up to 7 years.
Your credit history is a great way for a lender to tell whether you’re a risky investment or not. Lenders look not only at your minimum credit score, but also at whether you have a significant amount of late payments on your credit report.
Your Mortgage Broker will run your credit bureau to see if there are any challenges you need to be aware of.

3. Insufficient Income and Assets

With the high price of homes in the Vancouver & Toronto area, sometimes people simply don’t earn enough money to afford: mortgage payments, property taxes and strata fees along with their existing debt (credit cards, loans, lines of credit etc.).
You need to prove your previous 2 years’ income on your taxes with your Notice of Assessments (NOA). This is the summary form that the Federal Government sends back to you after you file your taxes, showing how much you filed for income and if you either owe money or received a refund.
If you can’t provide documentation to prove your income, then you will likely get denied for a home mortgage loan.
Some home buyers will need to provide more money for a down payment (perhaps a gift from their family) or try to purchase a home with suite income. In some cases, home buyers will need to add someone else on title of the home, in order to add their income to the mortgage application.

4. Down Payment is Too Small

A lender looks at the down payment as how much of an investment a buyer will be putting in their future home. Therefore, bigger is always better when it comes a down payment to satisfy your home mortgage loan application. Start saving now.
To qualify for a mortgage in Canada the minimum down payment is 5% for the purchase of an owner-occupied home and 20% for a rental property.
In Canada if you have less than 20% down payment, the federal government dictates that the home buyer must purchase CMHC Mortgage Default Insurance which is calculated as a percentage of the loan and is based on the size of your down payment. The more you borrow the higher percentage you will pay in insurance premiums.
For those with less than 20% down payment, the maximum amortization is 25 years, with more than 20% down payment 30-35 years (depending on the lender).

5. Inadequate Employment History

Most lenders will want to see a consistent employment history of 2 years when applying for a mortgage, because they want to know you’re able to hold down a job long enough to pay back the money they’ve loaned you.
To prove your employment, you will need to prove a Job Letter with salary details.

If you’ve been denied a mortgage, chances are it was because of one of the above five reasons. Don’t be deterred, with a little patience and some work on your end, you can put yourself in a position to get approved the next time you apply.

Are you looking for that new dream home, or anything that will get you out of your current rental property so you can officially become a homeowner?

If so, what is the minimum amount you are required to put down?

Below are three different purchase price categories. Each one has their own minimum down payment requirements and we have included some important notes to also consider at those prices.

| $1-$500,000 | Minimum 5% Down Payment |

• The lowest amount you need as a cash down payment for a purchase up to $500,000 is only 5% of the purchase price.
• For a $300,000 home, this would be $15,000.

| $500,001 – $999,999 | Blended Down Payment |

• The minimum down payment if your purchase price falls in this category is 5% on the first $500,000 and 10% on the remainder up to a million dollars.
• For a $650,000 purchase price, you would be required to put down $25,000 (5% on amount up to $500,000) and $15,000 (10% of the amount above $500,000 [$150,000 in this case]) for a total minimum down payment of $40,000. This would be a 6.15% down payment.

| $1,000,000 + | Sliding Scale |

• 20% requirement on entire amount up to $1,250,000 and 50% down payment on amount over $1,250,000 subject to a 75% loan to value.
• A $1,100,000 purchase price would be a minimum down payment of $220,000 (20%).
• $1,350,000 purchase price would require $250,000 (20% on $1,250,000) plus an additional $50,000 (50% of amount above $1,250,000 [$100,000 in this case]).
• Some lenders may make different exceptions depending on the strength of an application but, for the most part, the sliding scale information above is quite accurate.

There you have it! The three most common sized purchase prices and their required minimum down payment. Please keep in mind that almost all lenders will require you to have an additional 1.5% of the property value available in cash to cover all closing costs which may include, for example, lawyer fees, property transfer tax, and insurance. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

It’s getting to be that time of year when we are collecting our tax receipts to file taxes and hopefully get a nice cheque back from CRA.

1st time homebuyer’s Tax Credit
If you purchases a home in 2018 don’t forget to apply for the $5,000 tax credit. This could result in up to $750 in cash back in your pocket. In order to qualify you must have purchased a home in 2018. It must be registered in your name or your spouse’s. You and your spouse can not have owned a home in the previous four years. What that means is if you owned a home 5 or 6 years ago you would qualify as a first time homebuyer because of the amount of time you had been renting and not a homeowner. Homes include mobile homes, modular and floating homes.

GST/HST New Housing Rebate
This rebate is for people who built a home during 2018 and they can apply for a tax rebate. However, they can also qualify if they owned a home and did major renovations such as adding an addition to a home.
Granny Suites – you may also qualify for this rebate if you converted a non-residential building into a residential property. That means that if you turned your garage or barn into a granny suite for you or a family member you can claim the rebate.
Co-op Shares – if you purchased shares in a housing co-op for you or a relation to live in as your primary residence , the rebate can also be claimed.

Land Transfer Tax Rebate
If you live in Ontario, B.C. or PEI you also may qualify for a fist time homebuyers rebate on the land transfer tax and for the city of Toronto you can apply for a $3,725 municipal land transfer tax rebate. Put it all together and there’s a lot of money available for first time homebuyers if they know they qualify. Be sure to check with your Dominion Lending Centres mortgage professional to see if you do qualify.

There are two different types of mortgages when it comes to their balance in relation to the value of your home- high ratio or conventional.

When you applying for a mortgage, lenders use a ratio called loan to value. Your loan to value is exactly what it sounds like, the size of your mortgage in relation to the value, written as a percentage.

For example, if you have a $500,000 home and your mortgage is $300,000 and your down payment/equity is $200,000, your loan to value is 60%. This means that the bank owns 60% of your home and you technically own 40%, because if your house sold for $500,000, you would only get $200,000 as the remaining amount goes to the lender to pay out your mortgage.

When some one says high ratio and conventional mortgages, that is referring to your loan to value. If your loan to value is more than 80%, you have what is called a high-ratio mortgage. A high-ratio mortgage is when you own less than 20% of your home. You will also be required by law to pay what is called mortgage default insurance to help protect the lender if you were unable to maintain your mortgage payments.

A conventional mortgage is when you own 20% or more of your home and your mortgage amount is less than 80% of the value of your home. You do not need to pay mortgage insurance premiums if you purchase a home with 20% or more as well. When refinancing your home and borrowing against your equity, lenders are not allowed to increase your mortgage to an amount above 80% of your homes value. This means, if you own less than 20% of your home, you cannot refinance or take equity out.

You are also not allowed to purchase a rental property and receive a high ratio mortgage as you are required to put 20% down. Conventional and high ratio mortgages will also affect your interest rates as most lenders incentives high ratio buyers to work with them by offering lower interest rates.

There are several other categories when looking at loan to value and what each one can give you in terms of borrowing power, however, when it comes to high ratio and conventional, these are the biggest differences.

If you have any questions relating to high ratio or conventional mortgages, contact your local Dominion Lending Centres mortgage professional.

Here are 7 signs that you’re ready to buy your first home…

1. You have saved enough for the down payment
Most people think the biggest hurdle to overcome when buying a house is saving up a down payment. You normally need to save at least 5% of the purchase price as a down payment. This down payment shows that you have some of your own money invested in the house which gives the lender some comfort that you will protect your investment. Having the ability to save money is a great first sign you might be a future homeowner.
2. You have good credit
Having perfect credit isn’t a requirement to get approved for a mortgage in Canada. However, if your credit score is at least 650, your odds of getting approved are much higher. If your score is at least 620, you may qualify for a mortgage with as low as a 5% down payment. Lenders look at more than just your credit score. If you have not missed a single missed payment in the past 12 months this is a great sign that you’re more likely to qualify.
3. You can afford the mortgage payment
The amount of home you qualify for is tied to your debt to income ratio. It’s typically recommended to keep you spend no higher than 35% of your monthly income on housing related expense (Mortage, property tax and heating). If you’re renting a home, chances are that your mortgage payment will be close to what you’re paying in rent. Use our calculator to find out what your mortgage payment will be and how much you can afford. How much house can you afford calculator
4. You have steady employment
If you have been in the same job with the same employer for at least 1 year, you’re financially stable enough to have a mortgage. Having steady employment history is a good indicator that you’re ready to buy a house.
5. You don’t plan on moving to a new city anytime soon
We all dream of living somewhere different. Buying a house is better financially than renting, but only if you plan on staying put for 3 years. If you don’t have any immediate plans on changing cities, then buying is a great option for you. There’s a chance that home you buy today will increase in value in a few years. Buying a home is a great investment.
6. You have kids, or kids on the way
If you already have children, you most likely want to settle down into a nice neighborhood. Kids don’t like moving away from their school and friends, so buying a home makes the most logical sense. If you don’t have kids this doesn’t mean you’re not ready to buy a home, not at all.
7. You’re tired of renting
Renting is financially exhausting. You are basically paying someone else mortgage payment. You’re hurting your bank account and helping theirs. You might want to spruce your place up but as a renter, what’s the point. If you feel the need/want to upgrade your home, now is the time to buy. You will feel proud and a sense of accomplishment taking care of and improving your home. So, get your DIY skills ready.

If you think a few of these describe where you are at in life, contact a Dominion Lending Centres mortgage broker who can put you on a path to home ownership.

If you have a mortgage, chances are unless you win a lottery (cha-ching $$$) you’ll be doing a mortgage renewal when your current term has finished.

While most Canadians spend a lot of time, and expend a lot of effort, in shopping for an initial mortgage, the same is generally not the case when looking at mortgage renewals.

So what is a mortgage renewal?

Mortgages are amortized* over a set term* which can vary from 1-10 years.

About 6 months before the end of your term, your current lender will suddenly become your “Best Friend” showering you with attention and trying to entice you with early renewal offers… Please, please, please Mortgage borrower, sign here on the dotted line to renew… it’s sooo easy!!

You have 3 options

1. Sign and send back as is (don’t do it, really I mean it… don’t do it!!)
2. Check the market to make sure you are getting the best rate and renegotiate with your current lender
3. Talk to your friendly neighbourhood Dominion Lending Centres Mortgage Professional and together we can discuss the best options available for your situation.

Lenders know that 80% of people will sign their renewal forms, because it’s easy. Banks & Lenders are a business and as such they want to make the highest profits to keep their shareholders happy. As an educated consumer, you need to take the time to ensure you are being offered the best possible rate & terms you can get. Remember all those hours of research you did regarding lenders and mortgage rates when you were buying your first home?

Yes, signing the renewal document is easy, however, it’s in your best interest to take a more proactive approach. Money in the lenders pocket comes directly out of your pocket… so its time to get to work!

5 steps to save you money on your mortgage renewal

1. Receive the renewal offer from your current mortgage lender and examine immediately, which gives you enough time to make an informed decision.
2. Do your research via the internet and phone calls to find out about current rates.
3. Phone your current lender and negotiate!
4. If your lender will not offer you a better rate then it’s time to move your mortgage. YES, you will have to complete a mortgage application and gather documentation, just like you did for your original mortgage.
5. Take a look at your budget and see if you can increase the amount of your mortgage payments above the mandatory payments and save money by paying off your mortgage quicker.
   Your mortgage is one of your biggest expenses. For this reason, it is imperative to find the best interest rates and mortgage terms you possibly can.

As you can tell there is lots to discuss about mortgage renewals.

To save money, call a DLC mortgage broker to help you shop your mortgage around at renewal time.

Many of my clients and friends regularly ask me when or if they should consider a refinance. Here are 4 quick questions that I ask of them. The answer they give me, will very quickly tell me if we should be taking a deeper look at the mortgage refinance options available to them.

What do you believe the current value of your home is and what is the outstanding balance on your mortgage?
Have you ever heard your mortgage broker or banker talk about “loan to value”(LTV)? They are looking to determine what your outstanding balance of your mortgage is as a percentage of your property value. The reason we look at your LTV is because there are limits in Canada with respect to how large your mortgage can be based on the current value of your home. This gives your mortgage broker insight into how much equity or money you have access in the event that you were to refinance your mortgage.

What is the maturity date of your mortgage and your current rate/term length?
Understanding who your current lender is, what your maturity date is, and what your rate/term details are, will help your mortgage broker determine what type of penalty you might have for breaking your current mortgage contract. Knowing your rate will also give them the details they require to calculate the interest savings that you would receive from a refinance. When looking to refinance, your mortgage broker should be factoring these potential costs and overall interest savings into their overall benefits analysis when trying to determine if refinancing is the right option for you.

How is your household monthly cash flow impacting your short and long term financial goals?
Budget, budget, budget… this is one of those tools that we all know we should do, but it often gets very little of our attention each month. By understanding how much net income you have coming in each month and where that cash is going (cash flow) we can look at how a restructured mortgage could help. If you are finding that all of your money is disappearing each month and you’re having trouble getting by, a new mortgage can help restructure your monthly debt payments giving you some added breathing room. It is important to note that sometimes it is not about debt payments and it can be about high household expenses. Taking the time to assess your spending and cutting it back if necessary, might be enough to get you back on track. Check out our blog post on basic budgeting tips and tricks.

Looking at your outstanding debt, what are the current interest rates that you are paying and are you only making the minimum payments each month?
A quick snap shot of your current debt load, respective interest rates and monthly payments can give us some insight into how a refinance can save you interest. By understanding what your financial picture looks like and the amount of interest that you are currently paying to service that current debt, we can very quickly estimate how much interest you could save with a refinance. If you take a number of those high interest rate credit cards and roll them into a new, low interest rate mortgage, the savings can very quickly become quite substantial.

In closing, a refinance is a financial tool that can make a significant difference in your current financial picture. If you have reviewed the questions above and would like to take a closer look at your situation, there is never a better time than the present to make a change that will have a positive impact on your future.

Take the time to have a conversation with a Dominion Lending Centres mortgage broker who can give you some insight into how a new mortgage could help you with a brighter financial future.

Policies are always changing, and when you port a mortgage, a FULL application must be approved and completely underwritten with full, credit, income, property and policy review.
It’s a mistake to believe that just because you already had a mortgage, you will easily get a new one. Policies and rates are changing rapidly and you need a strategy to stay informed. SO BEFORE you consider a move, understand the worst case scenario of what you qualify for without porting your mortgage so you avoid disappointment of falling into the 70% of people that don’t end up porting. Mortgages can be made simple, when you are empowered with relevant information relating to the current market and your life stage. Depending on those factors, you might be happy to get rid of your old mortgage and get in with the new! We have a mortgage for that, and can help. On average less than 3% of mortgages are portable.
Let me list a few of the reasons why
1. Dates– most lenders have a different policy on the dates that will allow to port the mortgage; it can be weeks or months. Your closing date will determine that.
2. Amortization– porting a mortgage means you port the same amortization, so if you are moving up the property ladder, that may mean your payments are significantly increased making it less affordable or meaning you can’t qualify with your income.
3. Amounts– some have a 10% variance limit up or down, where the penalty will trigger or it’s no longer a fit within the policy.
4. Change in credit– depending on the credit score and outside debts you have will determine if you still fit the credit profile your previous mortgage had.
5. Income– if there has been a change in your income type or amount this will also impact the options.
6. Property type– some lenders only lend on single-family homes, or a particular zoning, or don’t do private sales- even if they did when you originally got your mortgage with them.
7. Rate– maybe the change in rates either way of the product type you took doesn’t allow for a port due to one or a few of the combined factors. For example, going from insured to uninsured comes with different policies.
8. Product– maybe the product you had no longer exists for your particular profile.
9. Inspections – maybe the lender approved it initially but after your inspection just as you wanted a reduction in price, they decide they are no longer going to lend on it or decide it doesn’t fit the profile or they wont do it under that program ( instead you need a purchase plus improvements or a hold back they may or may not participate in and maybe want a different fix that you or a strata council agree on.)
10. Bridge – if you want to buy before you sell, all the above factors come into play. Maybe the original lender doesn’t allow the length of time you need, there cost to bridge is much higher, or maybe they don’t approve that portion of the loan, which puts you back at square one.

Purchasing a home is complex, with many moving parts and needs to be understood as such. When you have an experienced Dominion Lending Centres mortgage broker by your side while lots of things can come up, we can guide you through what is best for your family, which is why we encourage you to be educated, and empowered so you are ready for your next part of your ownership journey.