If you are thinking of buying a property then you will likely need to obtain financing to purchase the home of your dreams. Many Canadians will begin the process by trying to crunch the numbers, looking at how much they will bring in each month from their jobs, as well as the down payment amount that they can afford to put down on their new home. However, there are 3 even more important numbers that you will need to assess in order to maximize the chances that your application will be approved.

Credit Score


Your credit score will serve as a key indicator in regards to how you handle credit. Scores typically range from 300 to 850, and the score is calculated by looking at the length of the client’s history, the total amount of credit that they have available, as well as their payment history. Interestingly, it is your credit score that will determine the amount of interest that you will need to pay each month for your new home.

For instance, if you have a stalwart credit score, which will usually exceed the 750 mark, then you will likely get the best interest rates available. However, if your credit score is found to be below 650, then you will likely have to pay a higher interest rate than someone who has an excellent credit score.

Loan to Value Ratio

The loan to value ratio comprises the percentage of the loan value to the value of the property in question. In other words, it is calculated by taking the amount of equity and subtracting that amount from the amount of money that is still withstanding on your mortgage. It is also important to note that the monthly mortgage payments that you will have to make will be further broken down into interest and principal.

To illustrate, let us imagine that you obtained a loan of $200,000 in order to buy your home. Let us also imagine that your monthly payment for your home is $1070.00: In this particular scenario, $930.00 of your payment would go towards paying your interest charges while the remainder would go towards your principal. In any event, the reason why the loan to value ratio is so important to lenders is that it will determine how much of a down payment you will need to put on your new home.

Debt to Income Ratio

Your debt to income ratio is also something that lenders will strongly consider before deciding to approve your loan application or not. That is, your prospective lender will also assess your gross monthly income and compare it to the amount that you owe on your credit cards, automobiles, utility bills, student loans, and other necessary monthly expenses.

If you are interested in procuring a pre-approved mortgage in Toronto in order to put yourself ahead of the competition or would like to learn about other mortgage solutions in Toronto, then please visit our website or give us a call at 888-492-3690.