“Being labeled as ‘high-risk’ by the banks, doesn’t mean you’re out of options!”
When applying for a loan or mortgage, there are many options to discover and it is important to work with the right people who understand your situation is unique and should be treated as such. Choosing to work with a private brokerage or a major Canadian banking institution is your first big decision.
There are a number of reasons why potential homeowners are turning to private companies more and more. among those reasons is having the banks label you as ‘high risk.’ You may think your finances are in order and you will qualify for a loan but there are certain instances where it may not be as easy as you thought. There are a few issues that may lead to you being labeled as high risk, some of which could include being recently divorced or even self-employed.
A private mortgage company will be able to offer you different loans and mortgages and work with your financial situation regardless of your marital status or occupational title. If you are self-employed, you must be prepared to show documents as proof towards your finances. This may include business credit scores, proof your down payment is not gifted, contractual agreements proving expected income and revenue for the future fiscal years, and much more.
This is why it is so vital to sit down with a trained professional and discuss everything you need to know
before moving forward with your loan or mortgage. Another one of the reasons potential Canadian homeowners are turned down is what’s called the Stress Test. The Stress Test involves a number of things, but mainly revolves around the ‘what if’ component of whether or not the borrower can pay off their mortgage if the rate were to be higher. This ensures the major banks that if the market fluctuates and rates need to be adjusted, the borrower will still be able to pay off their monthly bills and overall loan.
Many times, potential new homebuyers are turned away due to the fact they can only cover a certain
amount. Although that may qualify them for mortgage, if they do not pass the Stress Test, they may
encounter a number of road blocks preventing them from obtaining their loan. If you have the money for a mortgage, you should be able to qualify without having to go through the process of a Stress Test or
otherwise. Working with a private mortgage broker ensures you do not need to go through this and may still qualify for the loan or mortgage you desire! – JMS Mortgages