It helps to understand what goes into making the decision about your approval. Here are the key things that lenders generally consider when looking at an application.
a. Capacity to Repay
An Important part of my job as your guide is to help make sure that you can comfortably make your payments.
We look at TWO key measures of your ability to make repayments. GDSR and TDSR which are explained right below.
Gross Debt Servicing Ratio (GDSR) – your Housing Costs as a percentage of your Income. Housing Costs include mortgage payments, property taxes, heating costs and 50% of condominium fees, if applicable.
GDSR should not exceed 32% of your income.
GDSR = [Housing Costs / Total Income]
Total Debt Servicing Ratio (TDSR) – all your debt payment obligations, including Housing Costs, as a percentage of your income. Debt payment obligations include credit card payments, car loan or lease payments, and other loan or line of credit payments.
TDSR should not exceed 40% of your income.
TDSR = [ (Housing Costs + All Other Debt Payments) / Total Income ]
b. Credit History
When you apply for credit, you provide your consent for our lending department to review your credit report. The credit report contains up to six years of information about your outstanding and past debts, as well as a history of repayment.
c. Collateral (security)
When you apply for a mortgage or HELOC, the property will be used as security for the money you receive. We will assess the value of the property, which may require an appraiser to perform an appraisal. Appraisals can involve a detailed inspection of the interior and exterior, or simply an exterior inspection.
d. Net Worth
Your net worth is considered to be a good indication of your overall financial situation. Net worth is the difference between what you own (assets such as savings and real estate) and what you owe (liabilities such as credit card debt and loans).
VancouverTDMortgage.com provided by John Hahn – Manager, Residential Vancouver Mortgage of TD Canada Trust
E-mail: [email protected]
Note: VancouverTDmortgage(www.VancouverTDMortgage.com) is based in the Greater Vancouver area and represents TD Canada Trust mortgage products including HELOC(Home Equity Line of Credit), Fixed Rate Mortgages and Variable Rate Mortgages. In the event of content differences between VancouverTDMortgage.com and TDcanadatrust.com, TDCanadaTrust.com always overrides any official content that is discussed on VancouverTDMortgage.com. Vancouver mortgage manager John Hahn is a mobile Vancouver mortgage manager who specializes in the Greater Vancouver Area. John Hahn speaks fluent English and Korean and aims to assist new immigrants, non-residents, self-employeed or anyone who has questions about mortgages in general.