A Mortgage For Everyone

By Laura Morris

Applying for a mortgage can seem daunting, especially if you don't know whether or not you'll qualify. Not everyone has the same income, credit history, or source of income. Some people are self-employed. Others have just recently started working or have had credit difficulties in the past.

The good news is there are lots of options for consumers seeking a mortgage. Just ask Roy Deeks, mortgage broker and owner of The Mortgage Centre in Richmond Hill.

"They're not usually aware of the choices out there," says Deeks and a good way to learn about those choices is through a mortgage broker.

"Mortgage brokers aren't working for one institution. So, we need to have product knowledge for all types of situations," he says. They work on finder's fees from lenders, so there's usually no charge to the homebuyer. "They also have the tools and resources to shop the market and get the best deal with the given circumstances."

Some mortgage brokers specialize, like Francis Blau, president of Abacus Mortgages in Toronto. Her focus is helping people who are self-employed, had credit problems, declared bankruptcy, or other financial issues to find a home.

"They don't fit into the conventional mould of applicants for mortgages," says Blau. For financing, Blau works with private investors and various lenders who are willing to take on mortgage applicants that may not qualify through regular channels.

Mortgages for self-employed people

What about people who are specifically self-employed? Well, traditionally they've often had more of a challenge than mainstream mortgage applicants. Self-employed people can have a less predictable stream of income than full-time employees. However, lenders today are catering to entrepreneurs with self-employed mortgage programs. The Royal Bank launched theirs in 2003.

"It allows self-employed clients with good credit history and who have been in business for at least three years to borrow up to 90 per cent of the purchase price or the appraisal price, whichever is less," says Clayton Van Esch, senior manager, Home Equity Financing. He adds that this can be done without having to provide financial statements or verification of income.

The Bank of Montreal launched their program last year. "It's based on the strength of their personal credit rather then the strength of the business financial statements," says Michael Edmonds, spokesperson for The Bank of Montréal. If they've maintained a good personal credit rating, Edmonds says, "They shouldn't have to jump through hoops."

Look at credit counselling

What if credit is hindering your approval for a mortgage? There are financial institutions that provide credit counselling to help customers qualify for their mortgage. "We do this all the time," say Ray Hull, director of Business Development at Metro Credit Union in Toronto.

For instance, he advises clients on how to lower their debt. He explains that for mortgage application approval, the client?s consumer debt including credits cards, car payments, line of credit, etc. generally cannot exceed more than 40 per cent of his or her gross income. If this is the central issue for that particular client, he can advise them on how to consolidate their debt and lower their monthly payments. "Once their payments are lowered, their credit score will go up, their ratios will come down, and they will qualify." Providing that credit is not put back onto the cards.

"We can work with them," says Hull. "They don't know until they come and see someone and get advice." Consumers can also obtain their personal credit information online for a minimal fee by visiting Equifax or Trans Union Canada.

It's certainly better to know your options. Maybe now, finding a mortgage will seem less daunting.

Mortgage for you: Fast links

The Mortgage Centre, Richmond Hill

Abacus Mortgages

Canadian Institute of Mortgage Brokers and Lenders

Royal Bank of Canada

Bank of Montreal

www.bmo.com

Equifax Canada

Trans Union Canada

www.tuc.ca/