4 Vital Things Second Mortgage Lenders In Ontario Look For In Second Mortgage Loan Applications
If you want to take out a second mortgage loan, a second mortgage lender will closely evaluate your financial and personal circumstances to determine whether you are qualified for the loan or not. There are certain things second mortgage lenders in Ontario like to see in a borrower. In this article, you will learn about four vital things second mortgage lenders in Ontario look for in second mortgage loan applications.
Equity is one of the very first things second mortgage lenders are going to look for. They’ll want to find out the amount of money available to you before they can give you a loan. They’ll want to know the total amount of equity you’ve accumulated in your home. They will determine this by subtracting your current home value from the remaining balance on your first mortgage.
They will also want to make sure that you have a particular amount of cash in reserve. Sometimes, you will be required to have at least six months’ worth of cash to cover your mortgage loans. They do this to ensure that you will still be able to clear your loans even if you lose your job.
Your debt-to-income ratio is another vital thing second mortgage lenders in Ontario look for. Every lender has his or her own standard for a debt-to-income ratio that they are satisfied with. For a lender to figure out your debt-to-income ratio, he or she will add up all your periodic debt payments. If you have multiple sources of income, they will add up all the different sources. They will compare your total income every month to your total debt payments. If your debt-to-income ratio on the high side, they might not be able to secure you a loan.
Your Credit Score
Your credit score also plays a very important role when applying for a second mortgage loan. It is one of the most important things second mortgage lenders in Ontario look for in second mortgage loan applications. Your credit score determines the kind of borrower you’ve been in the past. It is a numerical presentation that says a lot about your borrowing history.
The lender will source for your credit file that contains information about your account history. Your credit score contains information such as the total amount of debt you have, how consistent you have been in your debt payments, and the number of late payments you’ve made. All this information is used to determine your credit score. Every lender has his/her own credit score that they can work with. When applying for a second mortgage loan, your credit score will likely be higher than it would when you are only applying for a first mortgage.
Your employment history is also going to be assessed by a second mortgage lender. Second mortgages are huge financial obligations, and lenders want to ensure your loan will be paid back in full irrespective of what happens. They will want to make sure that there are no large gaps in your employment history. So, your employment history may increase or decrease your chances of securing a second mortgage loan.
Second Mortgage Lenders Ontario
View Larger Map