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Qualifying for mortgage - not much savings

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Jon_Baker
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Qualifying for mortgage - not much savings  Reply with quote  

I live at Toronto and earn 54200 per annum. I have had plenty of debts but all that have been cleared and I just payed off my car loan. I want to own my own place now and I am
trying for a residential mortgage. I donít have much savings and I donít think I stand a chance to qualify for a mortgage. I would like to get some advice on what I should do to be able to qualify for a mortgage. Thanks in advance for the help.
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Post Mon Dec 22, 2014 9:53 am
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oldguy
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Jon - welcome.

quote:
but all that have been cleared and I just payed off my car loan.


The low savings account doesn't mean a lot to a lender, the main factor is your history of repaying loans - the lender needs to calculate the probability of a getting a trouble-free payoff. Ie, their goal is a solid on-time monthly check so that they get a continuous piece of their money back, plus the interest. Any deviation from that is a loss to the lender - if they have to send collection letters, pay a collector, etc, that eats of most of their 4% or 5% earnings. And if you default and cause a foreclosure, that causes your loan to be a big expense to them - ie, paying lawyers, hiring realtors, carrying inventory for multiple months.

So they will look at your history, not your savings. If you paid off your debts in full and on-time, you'll be perceived as a good borrower. Conversely, if you paid your debts late, asked for reductions in the amount, etc - then they won't want to loan to you. Eg, a big negative would be if you owed $10,000 on a cc and got it reduced to $5000 and then repaid $5000 (you've probably seen the Infomercials on TV).
Post Mon Dec 22, 2014 3:27 pm
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Jon_Baker
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Thanks oldguy for your comment. I have finally got approval for mortgage from Northwood Mortgage ( http://www.northwoodmortgage.com/ ). Looks like they looked into my history rather than the savings. Thanks once again.
Post Wed Dec 31, 2014 6:24 am
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