Minimum Required Credit Profile

CoryVance • Jul 30, 2019

Credit. The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future. When you borrow money to buy a house, you will be required to prove that you have a good history of managing your credit. But what exactly is a “good history of managing credit”? What are lenders looking at when they assess your credit report?

An easy way to remember the minimum requirements for credit is the 2/2/2 rule. 2 active trade lines for a minimum of 2 years, with a minimum of a $2000 limit.

Two active trade lines. You receive a trade line on your credit report anytime a lender extends you credit. This could be a credit card, an instalment loan, or a line of credit. Your repayment history is kept on your credit report. In order for a trade line to be considered active, you must use it at least once every three months.

Two years. Both your trade lines have to be established for at least two years. This gives the lender confidence that you have established your credit over a decent period of time.

Two thousand dollars. This is the bare minimum limit required on your trade lines. So if you have a credit card with a $1000 limit and a line of credit with a $2500 limit, you would be okay as your limit would be $3500. Sometimes people confuse the limit with the balance. You don’t have to carry a balance on your trade lines for them to be considered active. In fact, it’s best if you use your trade lines, but pay them off in full every month.

A great way to use your credit is to pay your bills via direct withdrawal from your credit card, then setup a regular transfer from your bank account to pay off the credit card in full. Automation becomes your best friend. Just make sure you check that everything is working as it should every once and awhile.

Now, although this all may seem pretty straightforward, there are a lot of situations where people assume they will qualify with a minimum required credit profile, when in fact they don’t. It could be a simple fix, or it could require a lot of time. So, if you are thinking about buying a house in the next couple of years, and want to make sure that your credit profile will be established by the time you are ready to shop, please contact me and we can work through your mortgage application.

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CORY VANCE

403-614-9211

cory@coryvance.ca

Older Canadians Have Mortgage Options

By Cory Vance • 07 May, 2024

Although it’s ideal to have your mortgage paid off by the time you retire, that isn’t always possible in today’s economy. The cost of living is considerably higher than it has ever been, and as a result, many Canadians are putting off retirement, hoping to make just a bit more money to add to that nest egg. So if you find yourself in the position where you’re considering your mortgage options into retirement, you’ve come to the right place. The advantage of working with an independent mortgage professional instead of a single bank is choice. When you work with an independent mortgage professional, you won’t be limited to an individual institution’s products; rather, you will have access to considerably more options. Here are some options available to older Canadians as they plan for mortgage financing through their retirement. Standard Mortgage Financing If you’ve got a steady income, decent credit, and equity in your home, there is no reason you shouldn’t qualify for standard mortgage financing, which usually comes at the lowest interest rates and best terms. Some lenders use pension and retirement income to support your mortgage application even if you’ve already retired. Reverse Mortgage Financing A reverse mortgage allows Canadian homeowners 55 years and older to borrow money from their homes with no proof of income, no credit check, and no health questions. A reverse mortgage is a fabulous mortgage solution that has helped thousands of older Canadians enhance their lifestyle. Home Equity Line of Credit (HELOC) A line of credit secured to the equity you have in your home is an excellent tool to allow you to access money when you need it but not pay interest if you don’t need it. Many older Canadians like the idea of rolling all their expenses and income into one account. Private Financing If you happen to be in a bit of a tight spot, you have a plan but need a financial solution; private financing might be the answer. Indeed not the first choice for many because of the higher interest rates. However, private financing can provide you with options where a traditional bank can’t. If you have any questions about securing mortgage financing for your retirement, please connect anytime. It would be a pleasure to work with you and walk you through all your options.

What You Need To Know About Online Mortgage Calculators

By Cory Vance • 23 Apr, 2024

You’d think an online calculator is a pretty straightforward device, one that you should be able to place your confidence in, and for the most part, they are. Calculators calculate numbers. The numbers are reliable, but how you interpret those numbers, not so much, especially if the goal is mortgage qualification. If you rely on the numbers from a “What can I afford” or “Mortgage Qualification” calculator without talking to an independent mortgage professional, you’re going to be misinformed. Don’t be fooled. Even though an online mortgage calculator can help you calculate mortgage payments or help you assess how additional payments would impact your amortization, they’ll never be able to give you an exact picture of what you can afford and how a lender will consider your mortgage application. While mortgage calculators are objective, mortgage lending isn’t. It’s 100% subjective. Lenders consider your financial situation, employment, credit history, assets, liabilities, the property you are looking to purchase. Then, they will compare that with whatever internal risk profile they are currently using to assess mortgage lending. Simply put, they don’t just look at the numbers. An online calculator is a great tool to help you run different financial scenarios and help assess your comfort level with different payment schedules and mortgage amounts. However, if you rely on an online calculator for mortgage qualification purposes, you’ll be disappointed. The first step in the mortgage qualification process is a preapproval. A preapproval will examine all the variables on your application, assess your financial situation, and provide you with a framework to buy a property based on your unique circumstance. Securing a preapproval comes at no cost to you and without any obligation to buy. It’ll simply allow you the freedom to move ahead with confidence, knowing exactly where you stand. Something a calculator is unable to do. Please connect anytime if you’d like to talk more about your financial situation and get a preapproval started. It would be a pleasure to work with you.