In today's climate, getting an investment loan or even refinancing can turn out to be a maze to walk through, as lenders assess the borrower's income and the nature of their job. in order to best ensure that the evolution of the pandemic does not affect their ability to continue to serve. a loan.
However, if your investment goals can still be set during this time, while lenders will ask you more questions to protect you against possible financial setbacks brought on by the virus, it is a safe way to go. .
Nancy Youssef of Classic Finance shares with Sarah Megginson, Editor-in-Chief of Your Investment Property, how borrowers can understand what lenders are looking for in a perfect loan application.
“More importantly, they review your current spending,” Youssef explains.
“They need to determine that you can afford the loan, but also that the expenses you reported are correct.
"How they do this is that they collect up to three to six months of savings statements to see what your spending looks like, and also to confirm that the income that you declared is what is received, ”she explains.
When it comes to already having a loan, which is common for investors who are growing a real estate portfolio and expanding their asset base, Youssef says lenders will take a close look at your repayment history of these existing loans.
"It is imperative that you make your repayments on time … lenders will usually ask you for statements to confirm your conduct on some of your existing loans, to make sure your repayments are up to date and made on time. strengthens your solvency vis-à-vis a bank, ”says Youssef.
She adds that lenders will want to put a check mark next to stable employment and income; two areas that are quite uncertain for households whose incomes have been reduced or entirely disrupted by COVID-19.
"Lump sum income tends to be looked at and frowned upon," says Youssef. "Likewise, if you have a lot of movement in your job, it creates a little more concern."
With more people working from home via digital screens – while having information handy is precious – Youssef warns of the pitfalls of filing multiple online applications in the hopes of increasing the chances of receiving approval.
"Most of the time clicking 'Apply Now' doesn't work in your favor as it can add additional notations to your credit report… definitely talk to a mortgage broker or someone who knows what the bank is looking for, ”she said.
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