Now that Canadian sub-prime lenders have increased rates, if you don't qualify for a mortgage at your bank, does that mean that you are in serious trouble? In a word, no. There are many institutional lenders that offer mortgages at about the same rates as banks, and many have more flexible lending guidelines than banks.
When it comes to insured mortgages (a mortgage needs to be insured if your down payment is less than 20%), did you know that the banks do not support all of the programs offered by CMHC and Genworth (the mainstream insurers)? Banks can be extremely picky about the types of applications they choose to loan on. Whether your mortgage application is for an insured or uninsured mortgage, mortgage brokers are often able to place mortgages at bank rates, where borrowers were previously declined at their banks. Here are a few examples of mortgage we recently placed...
- Self employed applicant unable to prove income with 5% down. Applicant's bank told him he needed a minimum of 25% down. We got an approval through an alternate lender at 5.79% rate.
- Bruised credit -- an applicant fell behind on his bills while he was out of work. After becoming re-employed he went to his bank and asked for an increase to his mortgage to consolidate his debt -- he was declined by his bank. We got him a new 1st mortgage with an alternate lender at 5.84% rate.
- Self employed, refinance with plenty of equity in house, was declined at his bank due to high debt load. We got an approval at an alternate lender at 5.84% rate.
When a bank declines your mortgage application, it can be very discouraging. Be sure you talk to a mortgage broker to have a clear picture of the options available to you.
