IK Financial Metarials
IK Financial - Mortgage Articles

How Leasing a Car in Canada Can Impact Your Mortgage Qualification

Leasing a Car in Canada - How does it impact mortgage
In Canada, leasing a car can potentially affect your mortgage qualification. When you apply for a mortgage, lenders assess your financial situation to determine your eligibility and the amount you can borrow. They consider various factors, including income, expenses, and debt obligations. Here is how a car lease can impact your mortgage qualification:

  • Total debt service ratio: Lenders evaluate your Total debt service ratio (TDS), which compares your monthly debt payments to your monthly income. When you lease a car, the monthly lease payments count as debt, and they are factored into your TDS. A higher TDS can reduce the amount you qualify to borrow for a mortgage.

  • Credit Score: When you lease a car, a credit check history is typically involved, which generates a hard inquiry on your credit report. Multiple hard inquiries within a short period can lower your credit score. A lower credit score can impact your mortgage application and the interest rate you qualify for.

It is also essential to notice that leasing a car adds to monthly expenses (liability), but it is viewed differently by mortgage lenders compared to buying a car (asset). Having a paid-off vehicle strengthens clients' mortgage applications.

Note that the impact of a car lease on your mortgage qualification may vary depending on individual circumstances, including the specific terms of the lease and the lender's criteria. To fully understand how a car lease may affect your mortgage application, it is advisable to consult with our mortgage professionals, who can evaluate your specific situation and provide personalized guidance.

Our experience is here to benefit you! We have worked with thousands of clients and have various solutions for everyone's needs. Don't wait and book a complimentary appointment with our team - ikfinancial.com.



IK Financial Mortgage Team operates on behalf of Mortgage Edge. Lic#10680

Follow Us on Social Media:
Instagram
Facebook
LinkedIn
YouTube