Tricks To Qualify For A Mortgage In Canada – Top 5 List

There are many tricks to qualify for a mortgage in Canada. Some of them may be more obvious than others and some of them may be more difficult than others.

1. Get Your Credit Score Above 680.

If your credit score is less than 600, it’s very difficult to qualify for a mortgage in Canada. If your score is between 600 and 680, it’s easier, but the terms will probably still not be great. One of the best tricks to qualify for a mortgage in Canada is to get your score above 680. Scores between 700 and 800 are excellent and anything above 800 is amazing.

2. Save Up Enough To Cover The Down Payment and Closing Costs

You need to have at least a 5% down payment to purchase a home in Canada. The maximum that any lender will lend you is 95% of the loan to value (LTV). But it’s not good enough to just have the money in an account. You need to show where it came from. For example, you can’t borrow money and put the borrowed money in your account and say “See! I have the 5% down right there!”. You need to show that you have saved it or earned it yourself. However, since we are talking about tricks to qualify for a mortgage in Canada…if you have enough income to make the payments on your debts, it might be better to save up that money and NOT pay the debt down if you want to use it towards the down payment.

Don’t forget when you purchase a home, you will also have closing costs (lawyer fees, land transfer tax etc.) It’s not enough to just have 5%. You need to show that you can cover those costs as well.

3. Guaranteed Income

This one is tough for some people; especially if you’re self-employed. If you don’t have a full time, permanent position with a salary or hourly rate with guaranteed hours and if you haven’t passed the probationary period, it makes it very difficult and sometimes impossible to qualify for a mortgage. In this case, there may be no tricks to qualify for a mortgage in Canada. However, if you have job stability and history, sometimes we can use an average income based on history to help you qualify.

4. Keep Your Debt Payments Low

The bank doesn’t really care if you have a lot of other debt as long as you can afford to make the payments. However, if it is revolving, unsecured debt like a personal loan, unsecured line of credit or credit card, the banks will really ding you for it. It’s better to have instalment loans with the set payments as low as possible. For example, if you have a car loan, you can often spread it out over a longer amortization period (7 years instead of 5 years), thereby reducing the set payments and allowing you to qualify for a bigger mortgage. That is one of the best tricks to qualify for a mortgage in Canada.

5. Get A Separation Agreement

If you are divorced or separated, the bank has no idea what the terms are or will be in the future. Your ex could owe you or vice versa. It must be written on paper, not only to qualify for a mortgage but also for your own protection and peace of mind!

Robert Floris is a Mortgage Broker. His office is located at 651 Fennell Avenue East in Hamilton, Ontario. If you would like to speak with Robert, he can be reached at 905-574-9200 #215. Alternatively, you can contact Robert here.

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