20 Nov

10 things NOT to do when applying for a mortgage – buying a home or refinancing


Posted by: Jeff Parsons

Have you been approved for a mortgage and waiting for the completion date to come? Well, it is not smooth sailing until AFTER the solicitor has registered the new mortgage. Be sure to avoid these 10 things below or your approval status can risk being reversed!

1. Don’t change employers or job positions
Any career changes can affect qualifying for a mortgage. Banks like to see a long tenure with your employer as it shows stability. When applying for a mortgage, it is not the time to become self employed!

2. Don’t apply for any other loans
This will drastically affect how much you qualify for and also jeopardize your credit rating. Save the new car shopping until after your mortgage funds.

3. Don’t decide to furnish your new home or renovations on credit before the completion date of your mortgage
This, as well, will affect how much you qualify for. Even if you are already approved for a mortgage, a bank or mortgage insurance company can, and in many cases do, run a new credit report before completion to confirm your financial status and debts have not changed.

4. Do not go over limit or miss any re-payments on your credit cards or line of credits
This will affect your credit score, and the bank will be concerned with the ability to be responsible with credit. Showing the ability to be responsible with credit and re-payment is critical for a mortgage approval

5. Don’t deposit “mattress” money into your bank account
Banks require a three-month history of all down payment being used when purchasing a property. Any deposits outside of your employment or pension income, will need to be verified with a paper trail. If you sell a vehicle, keep a bill of sale, if you receive an income tax credit, you will be expected to provide the proof. Any unexplained deposits into your banking will be questioned.

6. Don’t co-sign for someone else’s loan
Although you may want to do someone else a favour, this debt will be 100% your responsibility when you go to apply for a mortgage. Even as a co-signor you are just as a responsible for the loan, and since it shows up on your credit report, it is a liability on your application, and therefore lowering your qualifying amount.

7. Don’t try to beef up your application, tell it how it is!
Be honest on your mortgage application, your mortgage broker is trying to assist you so it is critical the information is accurate. Income details, properties owned, debts, assets and your financial past. IF you have been through a foreclosure, bankruptcy, consumer proposal, please disclose this info right away.

8. Don’t close out existing credit cards
Although this sounds like something a bank would favour, an application with less debt available to use, however credit scores actually increase the longer a card is open and in good standing. If you lower the level of your available credit, your debt to credit ratio could increase and lowering the credit score. Having the unused available credit, and cards open for a long duration with good re-payment is GOOD!

9. Don’t Marry someone with poor credit (or at lease be prepared for the consequences that may come from it)

So you’re getting married, have you had the financial talk yet? Your partner’s credit can affect your ability to get approved for a mortgage. If there are unexpected financial history issues with your partner’s credit, make sure to have a discussion with your mortgage broker before you start shopping for a new home.

10. Don’t forget to get a pre-approval!
With all the changes in mortgage qualifying, assuming you would be approved is a HUGE mistake. There could also be unknown changes to your credit report, mortgage product or rate changes, all which influence how much you qualify for. Thinking a pre-approval from several months ago or longer is valid now, would also be a mistake. Most banks allow a pre-approval to be valid for 4 months, be sure to communicate with your mortgage broker if you need an extension on a pre-approval.


Jennifer Fuentes

Dominion Lending Centres – Accredited Mortgage Professional
Jennifer is part of DLC Gold Financial Services based in Langley, BC.

2 Nov

How to Get a Mortgage After Bankruptcy


Posted by: Jeff Parsons

Bankruptcy is always the last resort-and it’s never easy or comfortable. However, sometimes it is the only option to turn to when life throws you something unexpected. The lasting impression it can have on one’s financial profile though can be overwhelming.

If you have bankruptcy in your past, don’t fear-we have 6 steps to take to help get you back on track and qualifying for your mortgage!

Step 1: Get official discharge quickly.
The quicker you are discharged from your bankruptcy, the quicker you can start rebuilding your credit. This starts with finding a good bankruptcy trustee. You can contact the BBB or Chamber of Commerce to find out recommendations, but we can also provide you with connections to complete your discharge in the shortest time possible.

Step 2: Review your most recent credit score.
You will need to pull from Equifax and TransUnion Canada. They are the two governing credit bureau organizations that manage credit reports in Canada. Look over both reports carefully and make sure there are no surprises and that your debts have been paid off completely. As a general guideline, getting a credit report yearly is a good rule of thumb. You’re managing your credit-if you see a mistake on the report it is up to you to follow the steps to get the mistake corrected.
If you find a mistake, you do have the right to dispute or explain ‘situations or mistakes’ to your bureau. Contact the credit reporting agency immediately and ask about their dispute resolution process. If you still do not agree with an item following the agency’s investigation, visit this link for TransUnion or this link for Equifax to find out how you can add an explanation statement to your report.

Step 3: Re-establish your credit
Mortgages are much easier to get with good credit. You will want to start to rebuild your credit as soon as you possibly can. To do this you will want to open up 2 tradelines (credit cards) through a secured institution such as Capital One, Home Trust, Peoples Trust, etc. They start with putting as little as $500 down with your credit being based on your deposit. Next, follow the 2-2-2 rule. This means you will want to keep those 2 lines of credit with a max limit of $2000 for 2 years. Keeping in mind that you must pay your bill on time each month (even if it is just the minimum payments).

Step 4: Pay any outstanding taxes to revenue Canada
This is probably one of the most important things to remember when you are getting a mortgage! If your taxes are unpaid then there is nothing we can do to help! You won’t qualify for any mortgage until any owing debts to Revenue Canada are paid off.

Step 5: Start Saving!
With all of the mortgage regulations in place now it is important to understand how much you will need to save to put down on a home. This will vary from person to person and situation to situation. Your personal history, credit score, etc. will have an effect on this as well. There are literally 100’s of ways that you can start saving money. Remember, every little bit helps!

Step 6: Put budgeted savings into an RRSP for the down payment
One of the easiest ways to make money on your savings, is to keep them in an RRSP fund. If you are a first-time home buyer in Canada you can borrow up to $25,000 from your RRSP’s to use towards the down payment on your new home. The beautiful thing about keeping it in an RRSP fund is the larger tax refund you will receive—for every $1,000-dollar contribution you will get $400 back! Now that’s smart saving!

In addition to these 6 steps, we recommend that you keep all bankruptcy documents on hand. Even though your bankruptcy has been discharged, the lender which you are applying for a mortgage with may ask you to provide a copy of the statement of discharge, along with copies of the bankruptcy papers. Keep them safe and on hand as this is a key piece of information to help you get a mortgage faster and easier.

Declaring bankruptcy is one of the life events that no one wants to face. But if that is part of your history, a Dominion Lending Centres mortgage specialist will walk you through the mortgage process and go above and beyond to make sure that you acquire the mortgage you are looking for!

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.