To calculate the overall balance between what income is coming in monthly minus other household debt payments, mortgage brokers and lenders will assess both the Debt Servicing Ratio (GDS) and Total Debt Servicing Ratio (TDS).
Handling multiple household debts is one such larger financial issue. Any decision that you make today to try to pay down this debt or any new debt you wish to take on can have the potential to hold long-term economic effects either positive or negative.
In the beginning of July 2021, The Canadian Mortgage and Housing Corporation (CMHC) announced that the changes that were made a year earlier would be reversed to the original numbers.
The Covid-19 pandemic has left many homeowners with questions regarding their mortgage arrangements. Homeowners may have concerns resulting from increased difficulty making monthly mortgage payments while trying to also pay all associated housing costs and any other ongoing monthly debt payments.
Another option open to homeowners with significant equity built in their homes is a Home Equity Line of Credit (HELOC). This second mortgage option acts like a revolving line of credit enabling funds to be available as the balance is paid off, a homeowner only needs to pay the monthly interest on the line of credit.
Regardless of the type of mortgage financing that works best for your immediate financial needs, you can properly prepare for your meeting with a mortgage broker by being aware of what your broker should be addressing.
Throughout Ontario, private lenders are well-established and experienced in negotiating private secured second (and sometimes third) mortgage options for existing homeowners with poor credit or high household debt ratios.
Just as in all second mortgage loan options, all lenders will be assessing the degree of equity in a homeowner's property. To calculate home renovation loans a lender will also ask to see a current appraisal to determine the current value of the property.
Of all the criteria that Ontario lenders assess, credit remains top of the list when it comes to approving refinancing options utilizing your home equity.
It can not be stressed enough that you need to bring a recent appraisal of your property to any meeting with a lender. All Ontario-based lenders including the big banks, trust companies/credit unions, and any private lending option will be assessing this appraisal very carefully.