Being declined is disorienting, particularly when nobody explains why. The instinct is to apply somewhere else immediately. That is usually the least helpful thing you can do.
First, find out what actually happened
Declines generally trace back to one of five things: how your income is documented, what your credit file shows, how much total debt you carry relative to income, something about the property itself, or missing documentation. Each has a completely different remedy.
Ask your lender for the reason in writing. You may not get a detailed answer, but even a general category narrows the field considerably.
Avoid the application spiral
Understand what the different lender tiers do
| Traditional lenders | Alternative lenders |
|---|---|
| Strict, standardised income and credit guidelines | More flexible assessment of income and credit |
| Lowest cost when you qualify | Higher rates, and often lender and brokerage fees |
| Terms commonly one to five years | Terms commonly one to three years |
| Heavy weight on documented income and score | More weight on equity and the property |
Neither tier is inherently better. Traditional lending is cheaper when you fit it. Alternative lending exists for files that do not, and it is priced accordingly.
Get your file in order before applying again
- Obtain your own credit report from both Canadian bureaus and read it carefully
- Dispute anything inaccurate, in writing, and keep the correspondence
- Reduce revolving balances where you can, particularly cards near their limits
- Gather income documents appropriate to how you are actually paid
- Confirm any tax arrears are addressed or that a payment arrangement is documented
- Write down what happened and when, for anything unusual in your history
Decide honestly whether now is the right time
Sometimes the correct answer is that the file is workable today at a higher cost. Sometimes it is that three to six months of specific, deliberate action would open materially better options. A good review tells you which, and gives you the reasoning rather than just the conclusion.
A bank decline does not always mean the conversation is over. It means the conversation needs different information.
This article is general information only. It is not a commitment to lend, an approval, or legal, tax, or financial advice. Mortgage availability, rates, terms, fees, and approval depend on the applicant, the property, lender requirements, and applicable law. Please review your own circumstances with a licensed mortgage professional.