• October 20, 2023
  • Written by Admin

What to Do When a Bank Declines Your Mortgage Application?

Applying for a mortgage is an exciting step as it brings you one step closer to your dream home. But a declined mortgage pre-approval application in Ontario can dash your high hopes in no time.

However, do not lose hope; it’s not the end of your homeownership dream. Below, we will discuss some practical steps to help you navigate this situation and improve the chances of your mortgage pre-approval application in Ontario.

  1. Understand the Reason

First, figure out why your first-time buyer mortgage application in Canada was rejected. Banks use specific criteria such as credit score, income, job history, and debt-to-income ratio to evaluate a mortgage pre-approval application in Ontario. Contact the bank to request an explanation for the rejection. This will help you identify areas that need improvement for future applications.

  1. Review Your Finance

Take a thorough look at your financial situation. Assess your credit report for any errors or negative marks that could have affected the bank's decision. You can get your credit report online from TransUnion or Equifax. Paying off outstanding debts, lowering credit card balances, and maintaining a healthy credit utilisation ratio will boost your credit score. Also, work towards building a stable employment history and reducing other debts to improve your financial standing.

  1. Seek Professional Guidance

Consider seeking assistance from a mortgage professional in Canada or a financial advisor. These experts have a deep understanding of the lending industry and can guide you toward a successful mortgage pre-approval process in Ontario. They will assist you in assessing your finances and identifying areas for improvement. These professionals can also suggest alternative mortgage options such as private lenders in Ontario who may have more flexible criteria.

  1. Explore Alternative Lenders

If a traditional bank declines your mortgage application, explore alternative lenders such as credit unions or private lenders in Ontario. These institutions have flexible lending criteria and may be willing to work with individuals rejected by banks. However, be mindful that alternative lenders may ask for higher interest rates or a larger down payment to mitigate their perceived risks.

  1. Build a Larger Down Payment

Increasing your down payment amount is another way to enhance your chances of first-time buyer mortgage approval in Ontario. A larger down payment reduces the loan-to-value ratio, making you less risky to lenders. So, save diligently and explore various avenues to accumulate a more substantial down payment. This will show financial stability and commitment, making you a more attractive candidate for future mortgage pre-approval applications in Ontario.

Read more: All You Need to Know: Mortgage Down Payment in Canada

  1. Strengthen Your Application

Before reapplying for a mortgage, take time to strengthen your application. To do that, collect additional documentation to demonstrate your financial stability such as tax returns, bank statements, or proof of assets. Ensure that all paperwork is accurate, complete, and organised. A comprehensive and well-prepared application can increase your chances of a successful mortgage pre-approval process in Ontario.

  1. Improve Your Financial Profile

While waiting to reapply, focus on improving your overall financial profile. Avoid taking on new debts or making major financial decisions. Pay your bills on time, maintain a stable income, and be cautious with credit card usage. By demonstrating responsible financial habits, you can ensure a successful mortgage pre-approval process in Ontario.


Being declined by a bank for your mortgage is undoubtedly discouraging. But this doesn’t mean it's the end of your homeownership journey.

By understanding the reasons for rejection, reviewing finances, seeking professional guidance, exploring alternative private lenders in Ontario, building a larger down payment, and strengthening your application, you can increase your chances of obtaining a mortgage approval in the future.

Remember, persistence and dedication are key during the mortgage approval process in Ontario. With the right steps, you can turn a rejection into an opportunity for future success.

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