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.
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