A report called the Financial System Review has been released, and in it Bank of Canada Governor Stephen S. Poloz said that “prospective homebuyers and their lenders should not extrapolate recent real estate performance into the future when contemplating a transaction.” In other words, be careful: Past performance doesn’t always equal future results. While this is obvious, mortgage brokers are starting to see some lenders looking at mortgage applications differently than they have in recent years.
 
Cara Savege, principal mortgage broker with Primeria Mortgages in Vancouver, says that exceptions used to be fairly common with a mortgage application; if a borrower’s income wasn’t exactly what it needed to be or that the reports from the credit bureaus weren't perfect, that used to be okay. Not so much anymore.
 
“If you’re looking for an exception to a policy, they’re not happening as much,” Savege says. “Before we could get a few exceptions, now we’re lucky to get one.”
 
Appraisals done by lenders are also a growing problem for buyers looking for mortgage approvals, especially first-time buyers who may only have 5% down for a home purchase. If a home appraises less than what a home buyer offers – which is happening in upward markets where bidding wars are commonplace and it may take a couple of months for home values to catch up – then they’re left in the lurch because they need 5% of the purchase price, not the lower value.

It’s more important now than it has been in recent years to make sure your finances are as good as they can be before even approaching your lender for a mortgage pre-approval. An experienced mortgage broker can help you to find appropriate financing as well as position your application for the best chance of approval.
 
There are some great mortgage calculators on whichmortgage to help you decide what you can afford or what type of mortgage might be best for you.


Related stories:
Canada needs tighter lending rules
Lying on mortgage applications is ok

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