Plan "A" Qualify for a Mortgage
Plan "A" or Plan "B"
The idea behind a plan "A" or a plan "B" is simply: to have a plan without which no objective is achievable.
My advice to my clients is to guide them to build a plan, either by the route of Plan "A" or by the path of Plan "B", the objective is the same, that is, to Get a Mortgage to Purchase a House, to Invest in the Real Estate Market or Borrowing Against Home Equity.
Plan "A" to Get a Mortgage is the same as “Build a Three Leg Table”, that is a stable table, but if any of its legs are missing, the table falls over.
In our case, if we do not have a good planning of one of the three main pillars of the mortgage process, we will not be able to activate the system, and therefore we will not have the possibility of accessing a loan with which we can achieve the final objective of buying a home and it will become less achievable every day.
The first pillar corresponds to the Income that we must demonstrate, as well as the Job Stability or the type of work we have. Lenders need to see your capacity or space for a new debt, as well as stability since this new debt is long-term, perhaps 20 to 30 years, depending on the amortization that we request, in other words, with this they see your capacity repayment and loan amount that you can access.
Here the amount we have for our initial payment or Down Payment counts a lot, remember that at least in Canada you must have 5% of the value of the property.
The second pillar focuses on the Credit Situation: In this section the lenders observe the history and behavior that you have had in other requested credits, such as credit cards, lines of credit, car loans and others, as well as the credit rating that The Equifax system assigns you, the type of credit, product and mortgage rate that you can access depends on it; and
The third pillar is the Affordability, which is a huge issue now these days for those who wanted to buy a home in Canada's top 3 cities or in their GTAs.
This area does not depend to much on your selfe, but you have the power to improve it. It is about how prices grow in a certain city and the possibility or material impossibility of being able to buy in that city because the annual income is not related to the price of the houses, and the only possibility that exists of being able to access a house is the relocation, that is, that you relocate in the city where your income capabilities are related and affordable with the prices of that city.
You can download the following Venn diagram to analyze these three pillars and understand the relationship between them.
Contact us to to see how all this factors works for your specific purposes and needs.