Why lenders may refuse your mortgage application

I always suggest my clients talk to a mortgage broker or their bank before starting to look for a home. Do not rely on mortgage calculators on websites to pre-qualify you.

There are many reasons why your favourite bank or lender may reject your clients when they apply for a mortgage. Here are some of them.

Not enough credit history:

If you are new to the country or you recently finished at college/university or you don’t own any credit cards, lenders likely will not give you a mortgage because of the lack of credit history. Lenders want to know your paying habits.

Low or bad credit score:

If your Equifax credit score is bad or too low, banks and lenders may not lend you any money. Bad credit ratings result from missed payments in the past, bankruptcy and deferred payments. It is possible A lenders will refuse you and B lenders will charge a very high interest rate.

Recently started new job:

If you recently started a new job, chances are banks and even B lenders will wait at least until your probation period is over. Sometimes this can be six months or more. If you have a stable job and have been working at your current job for some time, lenders will look at you as a good candidate for a mortgage.

Too much loan debt:

Even if you have a stable job and you have worked at your current job for many years, if you already have too many loans or too much debt (high car payments, credit card debt, student loans), chances are you may be refused for your mortgage.

Not enough for a down payment:

These days it is hard to find detached homes in Greater Victoria for less than $600,000, making it tough for young people to come up with a large enough down payment.

Self employed income:

If you are self employed or you fall under the category of self employed contractor, banks and lenders will request the last two years of your income tax notice of assessments.

Too many properties:

Everything is fine if you have good stable job, you have enough money for a down payment and your credit score is fine. But it is possible the bank you deal with will refuse another mortgage because you now have too many properties. All banks have limits of how many mortgages they can grant to the same person.

Unforeseen events in your life:

Life is very unpredictable. Unforeseen events such as health issues, job loss or a divorce will increase the chance that you are going to be refused for a mortgage.





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There is quite a bit of controversy over Short Term Vacation Rentals (STVR) , commonly referred to as Air B n B.
Concerns from the government, include the fact that these are commercial businesses, competing against hotels. Yet most do not pay commercial taxes, and are paying lower property taxes as if they are residential properties. Some municipal politicians are saying that condominiums and secondary suites, that used to be rented to long term tenants are now being rented out as vacation properties, resulting in a shortage of residential accomodations.

The City of Victoria is currently looking at this issue, and is proposing changes to current zoning, and the creation of bylaws to regulate this.
To quote from an August 28 City memo: "To date, no formal public engagement on this matter has been undertaken; however, since Council began considering these issues in 2016, hundreds of items of correspondence have been received at the City expressing a broad range of opinion on the issue of rezoning and the acceptance of STRs in general."

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September 1, 2017  
A total of 736 properties sold in the Victoria Real Estate Board region this August, 16.6 per cent fewer than the 883 properties sold in August last year.  
"I admit to being a little surprised by the August numbers," notes Victoria Real Estate Board President Ara Balabanian. "I expected inventory numbers to be climbing by now, but instead we've seen even lower numbers of listings on the market. This is likely leading to some buyer fatigue along with pressure on pricing in high demand areas."
There were 1,917 active listings for sale on the Victoria Real Estate Board Multiple Listing Service® at the end of August 2017, a decrease of four properties compared to the month of July, and 8.5 per cent fewer than the 2,094 active listings for sale at the end of August 2016.
The Multiple Listing Service® Home Price Index benchmark value for a single family home in the Victoria Core in August 2016 was $743,200. The benchmark value for the same home in August 2017 has increased by 10.8 per cent to $823,100.  
"Though much too early to call a trend, we do see that the August HPI benchmark value for single family homes in the Victoria Core area has decreased by 1.3 per cent when compared to July. This is the first time we've noted a decrease in HPI values since August 2015." adds President Balabanian. "That said, this is not an indicator of a huge change in property values across our region. We've seen a phenomenally busy two years in real estate for our area and we are likely heading towards a period of more balanced activity.

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