The major Canadian banks have set very high criteria for people who are applying for a loan. This ensures that the banks reduce their exposure to any bad debt losses. Unfortunately, this means that many people in Quebec who can easily afford a mortgage are turned down. A borrower can get turned down if their credit rating is not very good or if the loan to value of their property is too high and they can be turned down for a host of other reasons. Private lenders in Quebec are much more flexible and will consider each loan application based it its merits.
Self employed income has always raised red flags with many traditional Canadian lenders such as the major banks. The primary reason for this is that self employment income can be overstated. People can simply say that they made more money and pay the additional taxes tax on the factious income. This may sound strange to pay more taxes, but it may help you get a mortgage at a much lower rate of interest. This can lower your overall monthly costs even with the additional taxes factored into to cost. Quebec private lenders look at self employed income as one component of the overall financial picture. As long as there is enough equity in your property a private lender will be interested in providing you with the mortgage you need.
Most private lenders in Quebec use the loan to value (LTV) ratio as the primary indicator to funding a mortgage deal. A LTV over 85% means that your chances of getting funding are low while a LTV below 75% means that your chances of getting funding are very good. The tricky area is when your LTV falls in between 75% and 85% LTV. Quebec lenders will look at each individual situation to decide on whether to provide funding for a mortgage. For very high LTV ratio a key factor may be how long it takes to sell a house. To find out your LTV ratio simply divide the existing mortgage by the value of the property, for example a $100,000.00 first mortgage divided by the $300,000.00 value of the property results in a 33% LTV ratio.
For most mortgage transactions a private lender will require an appraisal of the property. Appraisers provide an independent unbiased estimate of the present market value of a property. An appraiser will compare your house to three other similar houses that have recently sold in your area. Adjustments will be made for factors such as different house sizes or the number of bedrooms in the home. The appraised value will be the amount that the mortgage loan will be based upon, so as the property owner you should make sure the house is clean and tidy before the appraisal is done.
Our brokers strive to provide you with the best service and advice possible. We will be totally honest with you and tell you the pros and cons of all the mortgage options that are available to you. Our lenders are an excellent source of funding when other financial institutions have turned you down. Call our Quebec brokers for more information on lenders.
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