A List Of Important Items For Getting A Canada Mortgage
Before you can be approved for a Canada Mortgage
, the mortgage company considers four elements. They make a careful analysis and evaluation of your income, credit history, the property being purchased, and the down payment on the property. This will help the Canadian lender decide if he will make you a loan.
Regardless of whether you are employed or self-employed, having a stable income is very important. In fact, it is the first thing that mortgage lenders want to know. If you are self-employed, the mortgage lender will require you to present a certificate of employment along with the last two months of pay slips, and Notice of Assessment Forms from Canada Revenue Agency.
The Notice of Assessment forms confirm that you indeed are earning an income and paying your taxes on time. In addition to this, a representative of the mortgage institutions will call your office to verify your employment.
By having a stable income, you are assuring the mortgage lenders that you have the resources to pay the mortgage payments should you be approved of mortgage loan. Lenders also evaluate your capacity to pay by analyzing your employment history, monthly disbursement, and number of dependents.
To appropriately fix the amount of mortgage loan, lenders use a financial formula. They view your Gross Debt Service Ratio or GDS, and your Total Debt Service Ratio or TDS as conclusive elements for Canada Mortgage approval.
The GDS is the maximum percentage of your gross income that is apportioned to your monthly expenses. This includes payment for the principal and interest of mortgage, property taxes, heating and air-conditioning, and other dues. To qualify, it is important that your monthly expenditures do not go beyond 32% of your total monthly income.
The TDS is the maximum amount of your gross income apportioned for GDS and all other financial obligations. This includes payment for credit card bills and all things on the GDS. To have an approval for Canada Mortgage, your TDS should not go beyond 40% if your total monthly income.
Your Credit History is a piece of information that is always brought up whenever loans and finances are the issues. The lenders are keen to know how impeccable your credit score is. If in case, it is not, you can use some programs that focus on re-building your credit score. To ascertain your score, there are free services offered by some websites that you can use.
The selection of real estate property subject for mortgage is another crucial element. To qualify, choose the house and lot that use quality materials. The appearance and physical attributes of the property matter to the mortgage lenders. Mostly, they initiate a property inspection.
The logic behind this is the fact that the real estate property is the sole security of the lenders. Naturally, the lenders become wary of the physical condition of the mortgaged home. They want to ensure that in case of default, the property can still be re-sold. To accomplish this, a property appraisal is initiated prior to the approval of Canada Mortgage.
Finally, the down payment is not so much an important requirement because many mortgage programs provide 100% financing. Nevertheless, if you can offer 20% or more of the total mortgage price, the Canada Mortgage lender will not require default insurance.
by: Rudy Silva
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