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Mortgage Application Declined

As you await for your mortgage pre-approval application, you may find yourself looking forward to the furnishing, decorating, and landscaping that you plan to do upon moving into your new home. Although there is no harm in picturing how your home will appear once all of this work is done, these dreams may need to be placed on hold if the lender declines your application. This type of decision happens more often than you may suspect, and while it may seem devastating initially, it does not have to permanently derail your plans and dreams.

Why Are Mortgage Applications Declined?

In principle, lenders want to approve mortgage and loan applications – after all, their primary objective is to generate income and profit – but an application can be declined when the prospective borrower:

  • Has bad credit or a poor credit history
  • Has no credit history
  • Is self-employed, just recently employed, or is the sole wage-earner in the family
  • Has a high debt-to-income ratio (monthly payment obligations versus monthly income)
  • Has insufficient collateral or equity (down payment) for the appraised value of the property
  • Wants to purchase a home that is unaffordable based on their level of income and assets
  • Presents layered risk – a combination of risk factors that may include some of the above, as well as limited reserves available after closing, financing obtained by gift rather than via savings, etc.

What Are Your Options?

As mentioned previously, having a mortgage application declined does not necessarily mean that your dream of owning a home must be shelved permanently.

There are options that you can pursue to keep that dream alive – Some possible actions include:

  • Find a lender who will take on higher-risk cases – This may mean paying a higher rate of interest
  • Pay down credit card balances/debt – Improve your credit score (and get a better interest rate)
  • Reduce the mortgage amount – Adjust finances to increase funds available for a down payment
  • Consider a local or hometown lender (such as a credit union) versus a national bank/institution

At Mortgage Intelligence, Natasha Bridgmohan and her team have established partnerships with more than 50 lenders across Canada, including major banks, credit unions, trust and insurance companies, and other national, regional, or private lenders. These partnerships offer a wide range of alternatives and options that can be pursued should your original mortgage application be declined.

Need help because your mortgage application has been declined? Take advantage of our expertise and our network of partners. Contact Natasha and her team at Mortgage Intelligence today. Call us at 1-866-553-7467 ext 221 or 905-851-8871 ext 221.

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