Have you ever wondered what a Lender looks at when it comes to giving you a mortgage?
And yes, there are specific qualifications and standards. In this post, we are not getting into your ratios or your rate. We are simply going to explain the 6 Cs, what they stand for, and what they mean.
The first C stands for Character.
- We should start with this one because this is where lenders and brokers can look at pretty much all social media outlets and base character qualifications and speculations on the mortgage deal. Before web calculating, the character of a borrower came directly from the other c’s. Yes, lenders do Google you!
The second C stands for Credit Worthiness.
- How good is your credit? For how long have you been on the credit bureau? Your credit score isn’t just a number anymore. If it was, there would be a lot more lower rates being handed out. The score comes into play, but overall credit is looked at with borrowing nowadays.
The third C stands for Capacity.
- Can the borrower actually afford the payment? Do they have the means to pay back the mortgage payment every month on a monthly basis? This is where capacity is noted. This C takes Income into account heavily.
The fourth C stands for Collateral.
- Generally speaking, collateral means your house or the house which is being secured. Additionally, it can mean investments and other means of security that can be provided to possibly approve the mortgage.
The fifth C stands for Capital.
- This mainly is discussing your investments and other means of capital. Not just for payment of the mortgage, but overall pride in ownership can be expected, such as repairs and maintenance.
The sixth C stands for COVID.
- Face it, we need to realize that COVID did disrupt many families financially. Brokers and agents typically will note if clients have been affected by COVID in previous years financially. This gives some retrospect into the financial situation and also gives clarity on income fluctuations that may be present.
Now that you know the 6 Cs of lending, give a Mortgage Suite Agent or Broker a call. We can go through the qualifications with you, and help you on your path to a better mortgage! Also, make sure to check out the 3 factors of your mortgage approval.
