It’s a New Day… and a New Mortgage Application

Katherine Martin • June 29, 2016

Every time you apply for a new mortgage, your application has to stand on its own merit. Just because you were approved for a mortgage in the past doesn’t guarantee you will be approved for a mortgage in the future. Every application is its own thing! It doesn’t matter if you have have been a homeowner for 20 years with an impeccable repayment history or you are saving a down payment for your first home, we all start fresh.

So it’s always a good idea to start with or review the basics!

Mortgage financing, to the lender, is all about managing risk. In order to secure financing you will have to prove yourself as a “good risk.” To do this, lenders will scrutinize the following four areas of your mortgage application: your employment, credit history, down payment, and the property itself.

Employment

When you apply for a mortgage you are asking to borrow money, in most cases, a lot of it. The first question the lender will ask is, how can you afford to pay them back. They want to be sure that you have the ability to repay their money, with interest. And they don’t just take your word for it. Of course you believe you are good for the money… they need proof. You will be required to provide documentation that outlines your current employment status, and depending on that status, you might have to further support your income by proving a two-year history of earnings.

The stronger your employment history, the stronger your application.

Credit History

After assessing your ability to repay the mortgage by looking at how much money you make, the next best way to determine if you will make your mortgage payment on time is by looking at how you have managed other loans. Your credit report is a history of how you manage your financial obligations. It is a detailed account of every time you have agreed to borrow money, and your track record of following through. All this information is brought together inside a machine and you get what is called a credit score, which is a three-digit number between 300 and 900.

The higher your score, the stronger your application.

Downpayment

After assessing your ability to repay the money, and your past history of doing so in a timely manner, the lender wants to see that you have some “skin in the game.” Gone are the days of 100% financing, where you could get a mortgage with no money down. A 5% downpayment is the absolute minimum, where 10% is going to give the lender a lot more confidence in your ability to save money, while putting down 20% will bring you into a conventional mortgage where you don’t have to take our CMHC insurance. Typically, lenders want to see that you have accumulated your downpayment through savings, however there are other options to source your downpayment.

The more money you have to put down, the stronger your application.

Property

Most people either don’t realize or forget that the property itself is part of the mortgage application. The property is what the lender is holding as collateral in case you default on your mortgage. So if you don’t pay your mortgage as agreed, and they are forced to repossess your property and liquidate it in order to recuperate their money, they want to be sure that the property is in good shape. This is why writing a purchase agreement without a condition of financing is a bad idea. You could be the most solid applicant in Canada, but if the property isn’t a good risk, the lender won’t issue a mortgage.

There you have it. A lender will agree to give you a mortgage only when it is satisfied that:
you have an ability to repay the mortgage
you have the history to show you will repay the mortgage
you have some skin in the game
you want to buy a solid property…

The good thing about working with a Dominion Lending Centres mortgage professional is that you don’t have to approach any lender alone. We present your financial information to the lender on your behalf, and negotiate with the lender directly to ensure you get the best mortgage product available

 

This article originally appeared in the June 2016 Dominion Lending Centres Newsletter. 

Katherine Martin


Origin Mortgages

Phone: 1-604-454-0843
Email: kmartin@planmymortgage.ca
Fax: 1-604-454-0842


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Bank of Canada Rate Announcement Jul 30th, 2025

By Katherine Martin • July 30, 2025
Bank of Canada holds policy rate at 2¾%. FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario July 30, 2025 The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. While some elements of US trade policy have started to become more concrete in recent weeks, trade negotiations are fluid, threats of new sectoral tariffs continue, and US trade actions remain unpredictable. Against this backdrop, the July Monetary Policy Report (MPR) does not present conventional base case projections for GDP growth and inflation in Canada and globally. Instead, it presents a current tariff scenario based on tariffs in place or agreed as of July 27, and two alternative scenarios—one with an escalation and another with a de-escalation of tariffs. While US tariffs have created volatility in global trade, the global economy has been reasonably resilient. In the United States, the pace of growth moderated in the first half of 2025, but the labour market has remained solid. US CPI inflation ticked up in June with some evidence that tariffs are starting to be passed on to consumer prices. The euro area economy grew modestly in the first half of the year. In China, the decline in exports to the United States has been largely offset by an increase in exports to the rest of the world. Global oil prices are close to their levels in April despite some volatility. Global equity markets have risen, and corporate credit spreads have narrowed. Longer-term government bond yields have moved up. Canada’s exchange rate has appreciated against a broadly weaker US dollar. The current tariff scenario has global growth slowing modestly to around 2½% by the end of 2025 before returning to around 3% over 2026 and 2027. In Canada, US tariffs are disrupting trade but overall, the economy is showing some resilience so far. After robust growth in the first quarter of 2025 due to a pull-forward in exports to get ahead of tariffs, GDP likely declined by about 1.5% in the second quarter. This contraction is mostly due to a sharp reversal in exports following the pull-forward, as well as lower US demand for Canadian goods due to tariffs. Growth in business and household spending is being restrained by uncertainty. Labour market conditions have weakened in sectors affected by trade, but employment has held up in other parts of the economy. The unemployment rate has moved up gradually since the beginning of the year to 6.9% in June and wage growth has continued to ease. A number of economic indicators suggest excess supply in the economy has increased since January. In the current tariff scenario, after contracting in the second quarter, GDP growth picks up to about 1% in the second half of this year as exports stabilize and household spending increases gradually. In this scenario, economic slack persists in 2026 and diminishes as growth picks up to close to 2% in 2027. In the de-escalation scenario, economic growth rebounds faster, while in the escalation scenario, the economy contracts through the rest of this year. CPI inflation was 1.9% in June, up slightly from the previous month. Excluding taxes, inflation rose to 2.5% in June, up from around 2% in the second half of last year. This largely reflects an increase in non-energy goods prices. High shelter price inflation remains the main contributor to overall inflation, but it continues to ease. Based on a range of indicators, underlying inflation is assessed to be around 2½%. In the current tariff scenario, total inflation stays close to 2% over the scenario horizon as the upward and downward pressures on inflation roughly offset. There are risks around this inflation scenario. As the alternative scenarios illustrate, lower tariffs would reduce the direct upward pressure on inflation and higher tariffs would increase it. In addition, many businesses are reporting costs related to sourcing new suppliers and developing new markets. These costs could add upward pressure to consumer prices. With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged. We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs related to tariffs and the reconfiguration of trade. If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate. Governing Council is proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher US tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases from tariffs and trade disruptions are passed on to consumer prices; and how inflation expectations evolve. We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled. Information note The next scheduled date for announcing the overnight rate target is September 17, 2025. Read the July 30th., 2025 Monetary Report

Buying a Vacation Home? Here’s What You Need to Know

By Katherine Martin • July 24, 2025
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