#7 Decline - No Down Payment

Until October 2008, Canadians could purchase a home with $0 Down payment. In order to qualify for that type of mortgage, you needed to have a credit score of 680 or greater. The $0 Down Payment program was eliminated by the Federal Government, via CMHC, due to the mortgage meltdown in the USA. CMHC no longer wanted to be involved in insuring these riskier mortgages.

As a result, many people take themselves out of the market because they do not have a down payment and think there is no possibility of purchasing a home. Other people go to their bank and are told that they do need a down payment.

However, if you were to talk to an independent mortgage broker, like Mortgage Managers, you would learn that you can still purchase a home without a down payment!

Some of our lenders understand that there are a number of Canadians that have good jobs and good credit, but just have not had the opportunity to save a 5% down payment. Therefore, they have created mortgage programs for these clients which are often called 5% Cash Back mortgages. Essentially the lender will finance 95% of the purchase and "give" you a separate cheque for the extra 5% to be used for your down payment. I say "give" because the lenders do charge a higher interest in order to recoup the 5% over the 5-year term of the mortgage.

Not all 5% Cash Back mortgages are the same. Many lenders actually require you to have 5% saved in you bank account before they will give you the additional 5% cash back.

#8 Decline - Property Value is Too High

A high property value can cause your application to be declined in a few different ways.

a.) This could mean that the property you are purchasing is simply too expensive for you and your debt ratios are too high.
b.) This could mean that the Purchase Price (in the case of a purchase)or the Estimated Market Value (in the case of a refinance)is too high compared to the Canadian Mortgage & Housing Corporation's (CMHC) property database or the appraised value.

In many cases, unless you are working with an experienced mortgage broker, you may never know that your application has been declined for these reasons. Often the loan officer at the bank doesn't even know as they are simply told if you are approved, or not without a full explanation of why. You might even get a letter from the bank confirming the decline and "blaming" information that appears on your credit report, when in fact the decline has nothing to do with your credit.

This type of decline might leave you scratching your head if you are confident your credit is perfect and your income should support the loan. An experienced mortgage broker will be able to tell you excatly why your application has been declined and can advise you on how to remedy the situation.

#9 Decline - They Don't Like You

Your personality or character does not appear on your credit report or get factored into your debt ratio, but you can be assured that the loan officer at your bank can sway the decision to decline your application if they just don't like you. Maybe it's a personality conflict, the way you dress, the way you speak, or whatever. We've helped clients that have been discriminated against based on their age, even though that is illegal.

The loan officer is the bank's first line of defence and if they don't like you, you're in trouble. The loan officer is going to get paid their regular salary, whether they help you or they don't. Therefore, they are not really motivated to help you.

Independent mortgage brokers only get paid when your mortgage closes. So, guess who's side they are on? Yours! Mortgage brokers work on your behalf to position your application in the best possible light and send it to the most appropriate lender(s)to increase the likelihood you get approved.

If you're not getting the answers you need at your bank, please give us a call at 902-820-3303 or 1-877-996-6677.