Getting a mortgage can be a complicated and tough task, especially if you don’t know what you’re doing. Being rejected for a loan can be a big disappointment and an annoyance, but it happens all the time.
The mortgage application process is fairly rigorous, no matter who you’re applying with. To ensure you do not get denied again, you should understand why your first application got rejected.
Mortgage applications get rejected due to bad credit history, a change of employment, or high debt situations. One of the most important factors of acquiring a mortgage is ensuring you have a good credit score and income.
Your credit score has a huge impact on the kinds of loans and interest rates you will get. Make sure your credit report is free of errors that could affect your credit score. If your credit score isn’t great and a lender tells you that’s why you weren’t approved, don’t assume that means you won’t be able to get a mortgage. Different lenders have different requirements.
Keeping track of your credit score and monitoring your credit is a great way to ensure your credit rating is on the right track.
If you have a good credit history and score, your mortgage application still can be denied for a different reason. Even if you have a good credit score, lenders will compare how much money you earn to how much money you owe on items like credit card bills, vehicle payments, and student loans.
This is known as your debt-to-income ratio, and it can have a big impact on whether or not you qualify for a new mortgage. A mortgage application is usually denied if you have a high debt-to-income ratio.
Due to a high debt to income ratio, most lenders won’t want to offer you more credit if you’re spending too much of your monthly income paying off your debts.
Bankruptcy and debt restructuring services indicate to lenders that you have had an issue in the past about credit management. This may be another reason why most lenders will reject your application if you or your company has claimed bankruptcy.
If you can’t understand why your mortgage application was rejected, you should consider applying with different lenders.
One frequent mistake borrowers make is relying solely on banks. You should bear in mind, that banks aren’t always the best lenders. Many mortgage applicants are turned down by banks due to their restricted loan options; in this case, it is your lender, not you or your application, that is the issue.
This is why you should look for a reliable, versatile lender. Freedom Capital can provide you with a variety of financial solutions regardless of your dilemma. Let us be your financial lifeline, because when the banks say no, we provide you with the financing solutions you need.
Whether you’re self-employed, new to Canada or simply faced losses in your business due to the pandemic, Freedom Capital can help you get the mortgage you need. If you need help with your mortgage, want to talk to someone, or want to apply for a mortgage, visit us at freedomcapital.com today.