Canada has the highest household debt in the world. The average Canadian has a debt-to-household income ratio of 171%, which means that for every dollar of disposable income a household has, they carry $1.71 in debt. For graduates fresh out of college or university, the burden of student loans still rests heavily on their shoulders. For other Canadians, they are carrying their car loans and other necessary expenses. This poses quite the problem for Canadians when it comes to mortgage qualification, especially when you consider the Bank of Canada raised interest rates by a quarter percentage point in January.

But don’t worry! There are certain steps that you can take to increase your chances of getting approved and being offered a competitive mortgage interest rate.

Maintain or Improve Your Credit

You want to make sure that you maintain a good credit score. Higher credit scores enable you to borrow money from banks at lower rates. If your score is lower than where it needs to be, pay all your bills on time for a period of six months to a year (and then continue to pay them off on time forever). You should also reduce the number of credit applications you make. While many stores now offer their own in-house credit cards that offer rewards points when you shop there, opening several credit cards can actually hurt your credit. It may be enticing to grab a card for a company that you shop at often, but it’s better for your credit to hold on to a few cards for longer rather than many different cards all at once. When you are out buying groceries or other items, use your credit card as much as you can, and be sure to pay it off when you get home. This can help pull your score up to get it where it needs to be.

See what else you can do to improve your credit score.

Qualification

Before you get approved for a mortgage from a bank, or any lender, you need to provide information about your assets, liability, income, and employment first. These are indicators to lenders. They use this information to gauge your ability to pay your loan payments on time and in full. Lenders typically hold similar preferences. They prefer fewer liabilities to higher valued assets, a stable source of income to an unpredictable one, and permanent employment to contract or temporary work.

It can be disheartening to be successfully self-employed and still be denied on a mortgage because of how you earn your income, but proper record-keeping can help improve your chances. Keeping an up-to-date record of the required paperwork for a mortgage application, such as proof of your stated income, will make applying for a mortgage much easier.

Turn to Alternative Lenders

In 2018, the average Canadian credit score is 696, higher than the American average of 687. Since the lowest rates from the banks are typically offered to those with credit scores higher than 780, you shouldn’t feel bad about not getting the lowest advertised rate. Most Canadians wouldn’t qualify for those rates anyway.

Banks are traditionally seen as the mainstream choice for getting a mortgage, but focus is increasingly shifting to mortgage brokerages and online vendors who approve those who banks wouldn’t. These lenders typically charge higher interest rates than banks, but they often lend to clients who were previously denied and are worried about how to get a mortgage with bad credit.