people discussing

The Full Mortgage Amount: Should You Spend It All?

Buying a house in Canada can be hectic, as it entails properly handling your finances to make your home purchase easier. Aside from that, it would help if you determined how much mortgage you need to secure. After all, homes are on the market for different prices.

This is where mortgage pre-approval comes into the picture. Before buying a new home for you and your family, you must understand how mortgage pre-approval works and how it can help you with your mortgage loan.

What is Mortgage Pre-Approval?

Like most homebuyers, you’ll need a mortgage to finance your purchase. Before you can get a mortgage, you’ll need pre-approval. A mortgage pre-approval is a note that explains how much you can borrow for a home purchase. This is based on your income, credit score, and down payment size.

Getting a pre-approval letter means the lender will evaluate your financial situation and determine an amount you can afford to borrow. But what if the lender approves a higher mortgage amount than what you need? Should you spend it all? The answer is no. 

The mortgage amount you get is not a “use it or lose it” deal. If you only borrow the amount you need, you’ll have a lower monthly mortgage payment. That’s because your loan will be for a smaller amount, and you’ll have a shorter loan term. 

In addition, you’ll have less debt and interest to pay over the life of your loan. That means you’ll have more equity in your home, and you’ll be paying it back over a shorter period. This can be good if you ever need to sell or refinance.

How Does the Lender Determine the Mortgage Amount?

When you go to a bank or lender for mortgage pre-approval, you’ll instantly receive a quote for the maximum amount you can borrow. They often use mortgage ratios to identify what you can afford based on your:

  • Gross Debt Service Ratio: Your mortgage expenses should include your monthly fees, including the GDS ratio items. You can also add debt payments, such as credit cards, lines of credit, car payments, and alimony/child support.
  • Total Debt Service Ratio: The gross annual income required to qualify for the mortgage loan is called the TDS. This is the percentage of your yearly gross income that can pay your mortgage and all other debts.

How Much You Can Afford to Buy Your New Home

Although it’s tempting to use the full mortgage amount you’re approved for, you still have to consider various factors before deciding. These can include your current expenses, how much of a down payment you can afford to make, and whether you need to get a mortgage insurance policy.

It would help if you studied whether you want a conventional mortgage from a private lender or a government-backed mortgage. Conventional mortgages are available from private lenders, while government-backed mortgages are from government agencies like the Canada Mortgage and Housing Corporation (CMHC).

Once you’ve considered all these factors, you can start shopping around for a mortgage and compare interest rates and terms from different lenders. You can also work with a mortgage agent to help you find the best mortgage for your situation.

Final Thoughts

It is important to consider whether or not you should spend the full mortgage amount when taking out a loan. There are pros and cons to doing so, and it ultimately comes down to your financial situation. Spending the full amount may be a good option if you can pay off the loan immediately. However, if you are tight on cash flow or have little extra money, it may be better only to borrow what you need. 

Ottawa Mortgage Services is a mortgage agent that can help you with your mortgage loan pre-approval in Ottawa. Get in touch with us today for a free consultation!

commercial building

Tips before Buying Commercial Real Estate Property in Canada

There are many reasons to invest in commercial real estate in Canada. It’s a stable and developed country with a strong economy, so it’s an attractive destination for businesses and investors alike. It offers a variety of commercial real estate opportunities and a high quality of life. All these make it an ideal location for businesses of all types. 

Commercial real estate in Canada is an excellent option if you want a stable and profitable investment. Here are the tips that you need to do before you develop your commercial real estate.

1. Understand the Local Real Estate Market

Commercial real estate is a huge investment, and it’s essential to understand the local market before making a purchase. There are a few things to consider when evaluating a market:

  • The current state of the market. Is it in a buyer’s or seller’s market?
  • The types of properties that are selling
  • The price point of properties
  • The investment potential for the market
  • The growth potential for the market
  • The demographics of the market
  • The economic conditions of the market
  • The political climate of the market

These factors will give you a better idea of what to expect when investing in commercial real estate in a particular market. 

2. Local or Urban: Which Do You Prefer?

When it comes to commercial real estate, there are two main options: rural and urban. Both have advantages and disadvantages, so it’s important to consider which is right for you.

So, which one is right for you? It really depends on your needs and budget. Overall, if you’re looking for a property in a prime location with high foot traffic and more significant returns, urban commercial real estate may be a better option. Rural areas, although cheaper, may have more conservative returns.

3. Where to Get Your Funding

Commercial real estate is a major investment requiring a significant amount of funding. Before you begin shopping for a property, you must secure your financing.

Several ways to finance a commercial real estate purchase include traditional bank loans, private loans, and investment crowdfunding. Each option has its benefits and drawbacks, so it’s vital to do your research and choose the best option for you and your situation.

4. Which Builder to Work With

Choosing the right builders when you’re looking to purchase commercial real estate is an important decision. Here are a few factors to consider when making your choice:

  • Experience: Make sure you choose a builder with significant commercial construction experience. They will have a better understanding of the unique challenges that come with this type of project.
  • References: Ask for references from previous clients and follow up with them. Find out if they were happy with the final product and if the project was completed on time and within budget.
  • Financing: Ensure you understand the builder’s financing options and that they fit within your budget.
  • Location: Choose a builder who is familiar with the area where your commercial property is located. They will be familiar with the zoning regulations and other construction-related issues.
  • Schedule: Find out how long the builder anticipates the project will take to complete. Make sure their timeline works with your schedule and needs.

By taking the time to find the right builder, you can be confident that your commercial construction project will be a success.

Conclusion

There are many reasons to buy commercial real estate in Canada. The country has a strong economy and is a stable place to invest. The real estate market is also growing, which means there is potential for appreciation. You only need to consider numerous factors before jumping into the big decision. That will help you make the best decision for your business.

Once you have your finances in order and are ready to start looking for a home, it is important to find a mortgage agent who can help you find the best pre-approval loan in Ottawa that fits your unique situation. Ottawa Mortgage Services can assist you in finding lenders that match your needs. Contact us to learn how we can help.

Mortgage

What Is the Acceptable Credit Score When Applying for a Mortgage in Canada?

When applying for a mortgage in Canada, the lender will pull your credit score to assess your financial health. They will also look at several other factors, such as your employment history, income, and debts. If your credit score is high, it can show the lender that you are a low-risk borrower, and they may be more likely to approve your mortgage and offer you lower interest rates. If your credit score is low, the lender may view you as a high-risk borrower, and you may be less likely to be approved for a mortgage or offered good rates.

Here, Ottawa Mortgage Services shares what you need to know regarding credit score requirements for mortgages in Canada:

What Credit Score Will Get You Approved for a Mortgage in Canada?

In Canada, credit scores range from 300 to 900. A score of 660 or higher is deemed good, meaning that the risk of defaulting on a mortgage is low, and the person is a safe candidate for a loan.

To be approved for a mortgage, you will need a credit score of at least 680. Some lenders may be willing to approve a lower score, but a higher score is always better. A credit score of 700 is optimal.

Factors That Impact Your Credit Score

Here are some of the factors that have an effect on your credit score:

  • Payment History
  • Credit Utilization
  • Credit History
  • New Credit Requests
  • Types of Credit

How Does Your Credit Score Affect Mortgage Application?

Your credit score affects your mortgage in a few ways. First, it will determine the interest rate you qualify for. A higher score means you’re seen as a lower-risk borrower, leading to a lower interest rate on your loan.

A lower score could lead to a higher interest rate and could mean you won’t qualify for a loan at all. Many lenders prefer an applicant’s credit score of 680 or higher. But there are programs available for borrowers with lower scores.

Your credit score will also affect the size of your down payment. Lenders typically require a higher down payment from borrowers with lower credit scores.

Can One Get a Mortgage With a Bad Credit?

Everyone knows having poor credit can make it challenging to get a mortgage.

Lenders are typically unwilling to work with borrowers with poor credit histories, viewing them as higher risk. That said, it is still possible for someone to get a mortgage with bad credit. There are a number of specialized lenders who work with borrowers with less-than-perfect credit. These lenders are typically willing to take on more risk and, as such, may be more expensive than traditional lenders.

It’s important to note that getting a mortgage with bad credit will likely come with some challenges. For one, you may be required to make a larger down payment than you would with good credit. You may also be subject to higher interest rates and fees.

If you’re willing to work with a specialized lender and are prepared to make some compromises, getting a mortgage even with bad credit is possible.

Conclusion

Your credit score is one of the most important factors in getting approved for a mortgage in Canada. A high credit score shows you’re a low-risk borrower, one that is attractive to lenders. A low credit score could lead to a higher interest rate and could mean you’ll have to put down a larger down payment. So it’s certainly in your best interest to keep your credit score as high as possible. If you need more information on this, you can consult a mortgage specialist in Ottawa who can help you. 

Ottawa Mortgage Services is a mortgage agent in Ottawa that can provide you with the assistance you need when you apply for a home loan. Get in touch with us to set up an appointment!

man looking at paper

What You Must Know About Getting a Mortgage in Canada

Anyone buying a property will almost certainly require a mortgage. What is the process of getting a mortgage in Canada? It’s a basic financial instrument, but its many alternatives and interest rates might be perplexing. Because buying a home will most likely be the most significant investment of your life, you’ll want to be sure you understand how mortgages work.

How Does a Mortgage Work?

A mortgage is a loan that you take out to finance the purchase of a home. It’s a product that you’ll pay back for the duration of your home ownership, which means that you’ll be paying an interest rate for the use of your money. The principal of your mortgage is the amount of money you actually borrowed, while the interest is the fee you need to pay back to the bank to use your money.

What are the Qualification Criteria to Get a Mortgage in Canada?

Before you apply for a mortgage, it’s important to consider these five requirements for your application to run smoothly with any lender in Canada.

1. Down Payment

In Canada, buyers are required to have a minimum down payment of 5%. The minimum down payment can differ from lender to lender, with the average being 10%.

2. Credit Score

A good credit score is an important part of the application process when getting a mortgage in Canada. Your lender will look at your credit score, which is a reflection of your entire credit history. This score poses a minimum of at least 600 to 680, with a higher number reflecting a better credit history.

3. Secured Income

The lender will also look for proof of income and a steady job. This can be done with a letter from an employer, or by providing your most recently filed tax return.

Types of Mortgages

Do you intend to make additional payments to pay off your mortgage as soon as possible? Then you should try to acquire an open mortgage, which is more flexible in terms of prepayments. This sort of mortgage, however, normally has a higher interest rate.

On the other hand, a closed mortgage has a lower interest rate but limits the amount of extra money you may put down to pay off your mortgage faster. If you try to make prepayments that exceed the maximum specified by your lender or if you want to breach the mortgage arrangement, you will normally be charged a penalty fee.

Amortization Period and Term

It’s important to remember that both the amortization period and the term of the mortgage refer to the length of the loan that you will pay off. This length differs between mortgages, and it’s important to understand that the shorter the amortization period, the lower the interest rate is. The term refers to the number of years you will be paying off your mortgage loan. Depending on the lender, the maximum term of a mortgage loan is 30 years. You can, however, choose to pay it off in a shorter period.

Conclusion

There are many different mortgage options available, and it’s important to know how every one of them works. However, with a good understanding of your finances and of your finances, you can mortgage with confidence.

Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, commercial clients, and more. We also help clients with refinancing, pre-approvals, and debt consolidation. If you’re a first-time home buyer in Ottawa, we can help you find the right mortgage in the right neighbourhood. Get in touch with us today and let us know how we can help!

signing papers

Commercial Mortgages and Their Qualification Criteria

A commercial mortgage is basically a loan taken out to cover the cost of the property in case you default. The borrower is generally a business, though partnerships and incorporated companies may also take out commercial mortgages. The type of business operating on the property must also be identified in the mortgage application since this will affect your credit score and commercial mortgage rates.

The Different Types of Commercial Properties

When considering a commercial mortgage, one should first identify the type of commercial property they are looking to finance. If a residential real estate property is purchased as an investment property, it can be financed by a commercial bank; there are three categories that are considered. The first is a residential property comprising between one and four residential units. The second is a residential property comprising between five and ten residential units. The third is a residential property that already contains one or more commercial properties.

The Qualification Criteria to Pursue a Commercial Mortgage

You will have to meet certain requirements to pursue a commercial mortgage. The bar is set quite high, as loans for commercial properties are considerably more valuable than those for residential properties.

Below are the usual criteria that you may have to acquire.

1. A Good Credit History

Most lenders will not loan money to applicants with poor credit scores or little business experience, or startup capital. However, there may be lenders willing to accept applicants with a less-than-perfect credit history. The requirements for getting a good credit score will depend on the lender’s standards. You will have to get a little used to the different lenders’ requirements while shopping for the best commercial mortgage rates.

2. A Profitable Business

If you own a successful business, commercial lenders expect you to be profitable and able to provide steady payments. You will likely provide them with your business plan and financial projections to prove that you have the money on hand to make your payments on time. Some lenders may have a minimum net worth requirement of about $100,000 to show that you are able to handle the loan. The money should be liquid, not in equity, so that you will use personal finances, cash, stocks, or other assets.

3. A Good Down Payment

Commercial property typically requires a larger down payment than a residential property due to the larger risk. A down payment on a mixed residential and commercial property usually falls between 20 and 35 percent of the purchase price, while a purely commercial property has a higher down payment requirement, usually near 50 percent.

4. A Debt Service Coverage Ratio

The loan-to-value ratio is the most important criterion lenders will look at when you apply for a loan. It is a way of determining the amount of money you need to borrow. Lenders will consider how much cash you have available to make your monthly house payments. The ratio tells them how much debt you can handle.

Conclusion

Overall, a commercial mortgage is another type of mortgage loan that can be obtained to purchase commercial property, and it is somewhat of a greater value than residential property.

Finding the right lender, the right down payment and the right type of loan will help you get the most out of your loan. These tips should help you navigate your way through the commercial mortgage process and ensure that you get the best possible rate and terms on the mortgage you require.

If you are looking for a reliable company that provides mortgage services in Ottawa, look no further than our expertise here at Ottawa Mortgage Services. We offer mortgage agent services for first-time home buyers, self-employed individuals, and commercial clients. We also help with refinancing, pre-approvals, and debt consolidation. Call us today and let us discuss all your viable mortgage options.

Mortgage Pre-Approval

5 Ways Mortgage Pre-Approval Protects You From Rising Rates

With rising interest rates, now is a great time to find and buy a home. When you search for a home, get pre-approved for a loan to ensure you can afford to take on the risk of home ownership.

In a buyers market, the more advantages you may get, the better your chances of securing your ideal property.

What is a Mortgage Pre-Approval?

A mortgage pre-approval document is mainly signed by the bank or mortgage broker. With it, you are guaranteed to receive a loan for purchasing a home at a specific interest rate, amount, and term. 

Besides income and assets, lenders are interested in your debt/credit-to-income ratio. You should make sure you are in good standing with your mortgage company before you start shopping for a house.

Here are five ways why getting one can be beneficial for you:

1. Helps You Buy Now and Lock in a Lower Rate

Mortgage rates can go up and down. If you pre-approve a loan, you can buy now before rates go up; then, you can lock your rate in with a 30-day commitment fee or a nominal fee. 

Moreover, you can lock in your rate for up to 10 years. If you wait to get pre-approved until the last minute, you may be less likely to lock in a low rate.

2. Helps You Avoid a Higher Interest Rate

If you are not a ʻqualified buyer,’ you may be required to pay a slightly higher interest rate. Furthermore, ʻqualified buyers’ may be charged a higher interest rate if they are not pre-approved. 

If you do not have enough cash for your down payment and closing costs, you may not be able to obtain a loan. If you are approved for a loan and can’t close, you will have to pay a fee.

However, if you are a ʻqualified buyer,’ it may not be as easy to get a loan as you think. A bank will ask for documentation of your down payment and ample cash for closing costs.  As a first-time homebuyer, your lender may require a larger down payment and more cash for closing costs.

3. Helps Negotiate a Better Deal

Negotiating a better price is simpler if you have previously been pre-approved for a loan and can show your sellers your letter. Your vendors will be more likely to negotiate on price if they know they can count on you to pay them soon after you are “approved.”

On the other hand, ‘unapproved’ buyers may be required to pay a higher price at closing. If your sellers know you are committed to purchasing the home, they will be more likely to help you with a lower price.

4. Gets the First Option to Buy 

By having a pre-approval letter, you can get your offer accepted first. If a house receives many requests, only the pre-approved buyers will be allowed to make an offer. 

When you are ʻapproved,’ they will accept your offer first. If the seller is one of the ʻapproved’ sellers, they will usually ask for a higher price or a lower deposit.

Furthermore, ʻapproved’ sellers might have a higher market demand. Since they have been pre-approved, they may have a faster time selling their home. As a result, they might ask for a higher price.

5. Helps Avoid Foreclosure

Foreclosure is more likely when buyers cannot make their mortgage payments, but they can take measures to avoid it. A ‘short sale’ is one option. 

Your house or property may be worth less to the bank than it currently is. You might be able to work out a better deal with the bank. 

You should, however, be prepared to get an ‘appraisal’ of the property’s worth. Another option is negotiating a better agreement with the bank or selling the property before foreclosure.

Conclusion

Don’t put off being pre-approved for a loan. You might be shocked by how many individuals try to sell their homes before getting pre-approved for a loan. Remember, you are more likely to obtain a better bargain on your ideal house if pre-approved.

At Ottawa Mortgage Services, we realize that you’re seeking a mortgage services specialist who will examine your financial condition and help you get the best mortgage available. We’ll offer you several mortgage options, clarify what paperwork is required to qualify for your mortgage, negotiate with lenders on your behalf, and ensure you’re properly taken care of throughout the process. Take the first move, reach out, and let us know how we can help you!

Self-Employed

How to Get a Mortgage as a Self-Employed Individual

Millions of Canadians don’t work as an employee and instead are considered self-employed individuals. These people have the freedom of being their own boss. While that sounds amazing at first, it does come with some disadvantages. For many people, one significant setback of being self-employed is not being able to take out a mortgage. However, in this guide, we’ll show you that getting a loan as a self-employed individual is not only possible but can be easy with the right help.

Why Lenders are Strict Concerning Self-Employment

When you’re trying to get a mortgage as a self-employed individual, it’s important to remember that there will be some unique challenges. This is because job stability can be limited. It’s also important to consider that self-employed applicants are more likely to have a spotty credit history. This means that lenders may have more restrictive guidelines for self-employed applicants.

Getting a Mortgage as Self-Employed

In order to be eligible for a mortgage, you will still have to meet your lender’s qualifying standards for income. In other words, you have to have enough income to be able to pay your monthly mortgage payments.

Self-employed individuals don’t always have a stable booking schedule. This makes it hard for them to apply for a mortgage as a self-employed individual because conventional lenders don’t have a way to access the income of someone that doesn’t have an employer. But there is a way to get around this.

How Self-Employed Individuals Qualify for a Mortgage

Self-employed individuals who want to take out a mortgage will find that their lender will need to verify their income. However, the typical methods of proof aren’t always available to those who work for themselves. In order to overcome this, lenders have come up with a couple of options for self-employed persons who want to be able to take out a mortgage. These include:

Business Number Registration

Lenders can rely on сorporate documentation when assessing the income of self-employed individuals. This is because self-employed individuals often register their business with the Canada Revenue Agency (CRA). What this means is that their business number can be used as proof of income when applying for a mortgage.

Bank Statements

As a self-employed individual, you probably have your own bank account connected to your business or personal account. It’s also likely that you have a business account at an institution other than the one that you use for your personal banking. This is even more beneficial because it means you have the option of applying for a mortgage by providing bank statements from one of your business accounts.

Financial Statements

For non-traditional income verification, lenders also allow self-employed individuals to provide financial statements instead of pay stubs. This is usually more effective than other income verification types in this situation.

Notice of Assessment

There is another option for self-employed individuals who want to apply for a mortgage. This involves the mortgage applicant submitting a Notice of Assessment or your T1 General Income Tax Returns for the previous two or three years. This way, the lender can see a complete picture of your income and use it to calculate your mortgage.

Conclusion

This guide has shown you that getting a mortgage as a self-employed individual isn’t impossible. But it may be more difficult than getting a mortgage as an employed individual. The key to getting a mortgage as a self-employed individual is making sure to meet your lender’s requirements for income verification.

If you think you can qualify for a mortgage even if you’re a self-employed individual, then the next step for you is to find a mortgage agent who can help you connect with a lender. This is where Ottawa Mortgage Services comes into play. We provide mortgage agent services for first-time home buyers, self-employed individuals, and commercial clients. Reach out to us today to get your free assessment with no obligation.

mortgage

A Beginner’s Guide to Mortgage Pre-Approval

If you want to buy your own place, you’ll need to know how much you can afford. Your finances play a big role in this, and getting a mortgage pre-approval will help you understand your buying power.

How Does Mortgage Pre-Approval Work?

A mortgage pre-approval is a process that potential home buyers can use to see how much money a lender is willing to lend them. It is often recommended that buyers get pre-approved before making an offer on the house. The pre-approval process includes assessing the maximum mortgage amount you qualify for, your estimated monthly payments, and your interest rate.

Your mortgage pre-approval locks your interest rate for a set period, usually 90-120 days. If interest rates go up during that time, you’re still guaranteed the original rate. However, if rates fall, you can try to get a lower rate when you’re ready to close on your mortgage.

Remember that some lenders can only offer you a fixed interest rate for the duration of your pre-approval period. Based on the Bank of Canada’s policy rate, variable mortgage rates can change at any time. Pre-approvals are good for 90-120 days, although some lenders may offer them for up to 130 days.

What Are the Requirements for a Mortgage Pre-Approval?

Regardless of which mortgage lender you go to, you’re going to need to provide the following information:

  • Your identification
  • Letter of employment and proof of income
  • Position and length of time with your current employer
  • Additional income and assets
  • Outstanding debt
  • Bank statements
  • Down payment
  • Notice of Assessment from the Canada Revenue Agency for the past two years (self-employed individuals only)
  • Permission to allow the lender to obtain your credit report

How to Apply for Mortgage Pre-Approval

Since it doesn’t cost anything to get pre-approved, comparing offers from different lenders is a good idea. Most lenders will do a hard credit check as part of the pre-approval process, so make sure your credit score is in good shape before you start shopping around. 

Multiple credit inquiries from different lenders within a short period (usually 14 to 45 days) will only count as one hard check on your credit history so it won’t have a big impact on your credit score.

You can contact different mortgage lenders to see how much you’ll be approved for and what interest rates they offer. Or, you could use a mortgage broker who will shop around for you. The lender pays mortgage brokers, so there’s no cost to you.

It usually takes a day or two to hear back after applying. With formal approval, you’ll know exactly how much you can spend. Keep in mind that there are other costs like closing costs, moving costs, and ongoing maintenance. You may not want to spend your entire budget on housing.

Conclusion

Getting pre-approved for a mortgage is a great first step toward buying a house. If you get it done early in your house-hunting journey, you can compare mortgage offers and better plan your budget. The pre-approval process can take a little time and paperwork, but it is worth it when you are ready to make an offer on a home. 

Ottawa Mortgage Services provides mortgage agent services for first-time homebuyers, self-employed individuals, commercial clients, and more. We also help clients with refinancing, pre-approvals, and debt consolidation. If you’re a first-time home buyer in Ottawa, we can help you find the right mortgage in the right neighbourhood. Get in touch with us today and let us know how we can help!

Mortgage Application

Mortgage Application Denied: Here Are 5 Possible Reasons Why

Home loan denials happen, but it doesn’t mean you’ll never be able to buy a home. A lender may not have approved your loan for a variety of reasons. The key to success is knowing why something is happening and what you can do to fix it.

Check out our five probable reasons for a home loan denial. Also, find out what you can do to secure loan approval on your next mortgage application.

1. Low Appraisal

If the property’s appraised value is much less than the purchase price, the loan-to-value ratio (LTV) may be greater than the lender may legally allow.

Potential solution: Property value difficulties, while difficult to fix, is not insurmountable. Try renegotiating if the purchase price exceeds the neighbourhood’s house prices. Make a greater down payment and accept the lesser loan amount if you have the financial resources to do so. Unfortunately, depending on the market, you won’t be able to shop lenders to see if you can get more money. The chances of the house remaining on the market are small. As a result, you might think about renegotiating or making a larger down payment.

2. Poor Credit History

A low credit score often results from not making payments on time, carrying a high balance, or maxing out credit cards. Any of these things can impact your score and make it difficult to qualify for a mortgage.

Potential solution: The first step is to get a copy of your credit report and check for any errors. If there are any, you’ll want to dispute them right away. If everything looks accurate, you may need to take some time to improve your score before applying for a home loan again. This can be done by paying all bills on time, keeping balances low on your credit cards, and only opening new accounts when necessary.

3. Inadequate Employment History

Lenders like to see a steady employment history because it’s an indicator of future earnings potential. So, if you recently switched jobs or are self-employed, you may have a more difficult time qualifying for a loan.

Potential solution: The best way to overcome this issue is by waiting to apply for a mortgage until you’ve been with your current employer for at least two years. If you are self-employed, be prepared to provide additional documentation, such as tax returns and financial statements, to prove your income.

4. Lack of Downpayment

One of the biggest reasons people are denied a home loan is that they don’t have enough saved for a down payment. Most lenders require a down payment of at least 3-5% of the purchase price.

Potential solution: The best way to overcome this issue is by saving up for a larger down payment. You may want to consider setting up a separate savings account and automated transfers to make saving easier. Another option is to look into government-backed loans, like an FHA loan, which only requires a 3.5% down payment.

5. High Debt-Debt-to-income (DTI)

Debt-Debt-to-income is a ratio that looks at how much of your monthly income is going towards debt payments. A high DTI can make it difficult to qualify for a loan because it indicates you may have difficulty making your mortgage payments.

Potential solution: The best way to lower your DTI is by paying down your debts, which can include credit cards, car loans, and student loans. You may also want to consider waiting to apply for a mortgage until you’ve been with your current employer for at least two years, which will give you time to save up and pay down debt.

Conclusion

There are several reasons why your home loan application may be denied. But, don’t despair! In many cases, there are things you can do to improve your chances of being approved the next time around.

If you’re looking to apply for a mortgage, you need to find an agent that you can trust throughout the process. Ottawa Mortgage Services is the perfect partner to help you get that mortgage that suits your needs and your budget. Our team actively deals with lenders and negotiates all aspects of mortgage underwriting to ensure you get exactly what you need for your loan. Apply now and get a free assessment from a professional mortgage agent.

Mortgage

Separation Anxieties: Managing a Mortgage After a Divorce

Divorce can be challenging enough without the financial complication because you have to deal with the emotions. Worst case scenario will be if there are kids involved. You need to help them through the trauma while handling your heartaches.

You might face another post-divorce dilemma if you get through the emotional roller coaster: a mortgage. You might have to sell your current home if it is in both of your names or refinance it as a part of the divorce agreement. But if you are not making enough money to cover the bills, how will you pay for the divorce attorney?

If these daunt you, you should simply take a breather and read this blog carefully. We have tapped into the prowess of seasoned mortgage brokers in Ottawa to help you through this crisis.   

Talk about It

Your mortgage agent will encourage you to talk things over. You have to determine what each party wants. 

You may be tempted to tell your former partner to take off, but it is not that simple. Your ex-spouse might not have enough money for a down payment. With this said, you might have to work side by side with your former spouse in determining the path forward. It is certainly not an easy job, but it is undoubtedly possible with the help of an intermediary.

You also need to determine the value of the property. In this step, you need the help of an appraiser or a realtor. They can tell you how much the property is worth at the divorce.

Options for Handling the Mortgage

Your mortgage agent can offer you a few options. Think of them as life vests in a turbulent ocean of divorce. Here are some:

Sell Your Home

You can sell your house. As mentioned earlier, your home is probably the most valuable asset. It can fetch a reasonable price. The mental stress alone is worth it.  

However, you need to be creative in terms of selling it. You do not have to go the traditional route of a realtor. You can look for buyers online. If you have to sell it for whatever price you can get, you might have to wait for some time because it is no longer a seller’s market

Refinance

You might be astounded that you can still avail a refinance, but you still can. It would be best if you simply asked your mortgage agent. To qualify for refinancing, you need to meet the credit requirements of your lender. 

Kindly note that this choice is only available if you can afford the mortgage payment yourself. If you are unsure, you might have to go for a short sale. Remember that refinancing your mortgage has one significant upside: you can keep your house.

Refinancing may be an option after all. You would need to talk to a mortgage agent to see if you are qualified for this. 

Conclusion

You do not have to go through this alone. Your mortgage professional can guide you on this path. They can help you understand your options and decide which one best fits your situation. Do not be afraid to ask.

If you are going through this type of change, you should contact Ottawa Mortgage Services. As a mortgage agent in Ottawa, I can help you through this tricky monetary dilemma. You simply have to consult me, so contact me now for more information!