4 Things Lenders Consider When Looking At Your Application

Applying for a mortgage is just like writing an exam in school, it’s a lot easier to prepare when you know what you’re going to be graded on. Lenders take several factors into consideration when going through your application. At the end of the day, they want to ensure that they are at minimal risk, so you can bet they’ll be scouring your paperwork looking for potential problems with the same fervour as your grade 12 English teacher. At Source Mortgage, we can help you get your documents in order, but these four things are entirely up to you: 

Income

Getting a new job with great pay and benefits isn’t as impressive to lenders as maintaining a steady job over a long period of time. This is because they want to know that you have a dependable income that will allow you to stay on top of payments regardless of changes in interest rates. Contract, part-time, or self-employed workers will need more documentation to prove their income. In these cases, lenders will usually look at your average income over the last two years. 

Down Payment

Deciding on a down payment can affect your interest rates and eligibility, but there is more to it than that. Lenders won’t just take your word for it that you’re able to put X amount down on a house. They want to know where you’re getting this money from. Whether you pull from your savings account, investments, or the money is a gift from a family member, lenders need to see the paper trail. 

Assets

Assets are a way for lenders to gain back any losses in the case you default on your mortgage. Because of this, the more assets, the better. This could include chequing and savings accounts, TFSAs, RRSPs, and even the family van. A comprehensive list of your assets will help the lender determine your net worth. 

Debt and Credit  

Lenders look at your debt and credit for two main reasons. Firstly, they want to see that you know how to manage debt and credit. Are you making payments on time? Do you have a long credit history? In their eyes, not having any debt is just as bad as having too much. Secondly, they want to know that adding on mortgage payments isn’t going to bankrupt or stretch you too thin.

It’s important to be aware of these four factors if you’re looking to apply for a mortgage. When you’re ready to start compiling your application, reach out to your Calgary mortgage experts at Source Mortgage. Not only can we help you assemble your paperwork, but as brokers, we can send out your application to multiple lenders to ensure you receive the best rate and terms on your new mortgage!  Contact us today to get started.