Bank Declined Your Mortgage? Toronto

Self-employed income. A branch reads line 15000 and stops there. Alternative lenders use bank statement programs, add back legitimate write-offs, or average two years of business income.

Bruised credit. Recent lates, high utilization or a past consumer proposal fail a bank scorecard automatically. Alternative and private lenders price the risk instead of rejecting it.

Debt service ratios and the stress test. Qualifying at the benchmark rate pushes many otherwise affordable files over the ratio limits. Some lenders count rental and secondary-suite income far more generously than others.

The property itself. Small condos, buildings with litigation in the status certificate, rural or unusual properties, mixed-use, and homes needing major work are all common declines that have nothing to do with the borrower.

Newcomer or foreign income. Limited Canadian credit history and income earned abroad are policy problems at most branches and standard business at a handful of lenders.

A-lenders are banks, credit unions and monolines at the lowest rates with the tightest rules. B-lenders and alternative lenders accept broader income and credit stories for a modest premium and often a lender fee. Private lenders fund on the property and the exit plan, at the highest cost and the greatest speed.

The right answer is the lowest rung that will actually approve your file. Moving down one step is common; skipping straight to private lending when a B-lender would have approved is an expensive mistake.

Ask the branch specifically why the file was declined and pull your own credit report. A decline for a beacon score is a completely different problem from a decline for debt service or for the property, and the fix differs accordingly.

Do not shop the same application through five branches in a week. Each application triggers a credit inquiry and repeated inquiries make the file look worse to every lender who sees it. One broker submission reaches the whole lender panel on a single pull.