Montreal Mortgage Lending Questions And Answers
Montreal mortgage lending questions and answers features a post by Michael Bolanakis, a mortgage specialist with Scotiabank. Many of my clients are searching for information about the mortgage process here in Montreal. Michael wrote this post below, to share some of his knowledge and information on this process.
Q&A: The Mortgage Process
Many first time home buyers have not really thought about what the mortgage process entails. You may have lots of questions about the products, rates and fees but there is also more to it. Here are answers to some common questions:
How is a loan application assessed?
Most lenders base their affordability calculations on two traditional debt-to-income ratios. First, your Gross Debt Service Ratio (GDSR) is based on your monthly housing costs, including mortgage payments, property taxes, heating costs, and 50% of applicable condo fees. Lenders prefer that this ratio does not exceed 32% of your family’s gross monthly income, but can go as high as 44% in some cases.
Second, your Total Debt Service Ratio (TDSR) is your monthly housing costs plus all other debt (loans, credit cards, lease payments). Lenders prefer that this ratio does not exceed 40% of your family’s gross monthly income but can go as high as 44% for some borrowers.
As part of the mortgage qualification process, your lender will also review other important factors, such as your credit history or credit rating, your employment and the source of your down payment.
What information is needed when applying for a mortgage?
To help your Mortgage Advisor understand your financial situation, you will be asked for documents such as:
- Income documents (T4, paystub, employment letter and/or Notice of Assessments);
- Assets: The value of your savings, investments, properties and vehicles you may have;
- Liabilities: Confirm the balances and monthly payments of your current debts, including loans, leases, credit cards and lines of credit.
- Real estate: Information regarding real estate owned, such as mortgage statements, property taxes and rental income if applicable.
- If you’re applying jointly, each of you must bring your own financial information.
Before you sit down with your Mortgage Advisor take a moment to think about your goals, and your ability to manage new debt. Ask yourself how much extra cash you have each month for a loan and if cash flow allows for monthly, bi-weekly or weekly payments. Once you get to questions such as product choice and rates, you will already be in talks with your Advisor so you will be well- informed to make the right choices for you.
Home Financing Advisor
Tel: (514) 777-2862
Fax: (514) 564-2488