In part 1, we talked about how to really understand how a good mortgage broker gets you the right mortgage, you need to understand how lenders look at you using the 5 “C’s” of credit:
- Capacity – whether your income is sufficient.
- Capital – whether the size of your down payment is sufficient.
- Collateral – whether the property is of sufficient value and marketability to cover the amount borrowed.
- Character – your reputation and reliability.
- Credit – your history of meeting credit obligations.
How a mortgage broker looks at you
I also teased you with how, in unique situations, if one of the five “C’s” is weak, but the other four areas are strong, we can be creative in how we address the deficiency.
I recently had a mortgage application here in Ottawa that involved a couple with uniquely adverse personal circumstances. They both worked seasonally in landscaping, she earning about $34,000/year but he was working more on an occasional, part-time basis due to a permanent disability.
He had no credit, not even a bank account.
Now usually this is a major red flag, but in this case there were extenuating circumstances (the particulars of which are not necessary to share).
Qualifying for a mortgage
Because this couple was very strong in all other aspects of their application, I was confident in approaching lenders and having conversations so they could understand the circumstances.
- First, they were referred by a trusted source. Their trusted referral and my own inquiry confirmed these were people of high character.
- She had a long, stable employment history and excellent credit, he opened a bank account and credit card.
- Through their combined savings and gifts from family, they had enough capital to cover their down payment and closing costs.
- Despite their income, they were buying a property within their means – demonstrating capacity and collateral.
With her excellent credit, their combined savings, and an employment history that – despite its seasonal nature – was very stable, we were able to have a conversation with lenders and address any worries the lenders may have had.
And my clients became first-time homebuyers.
Having a mortgage plan
The point is, don’t disqualify yourself.
Now you might be right; you might not qualify for the mortgage you want. But if there are deficiencies, we can look at them and come up with a plan. Just because your circumstances might not be ideal right now, doesn’t mean they’ll be that way forever.
But first, have a conversation with your Ottawa mortgage broker.