We put in the work upfront to ensure no surprises when you write an offer on your dream home. Our thorough pre-approval process focuses on income, credit, down payment, existing properties, expenses, and other critical items to set you up for success.

Income Documentation

• Employed Individuals: Letter of Employment, pay stubs, T4s, and bank statements to confirm deposits.
• Self-Employed Individuals: T1 Generals, NOAs, SOAs, and, if incorporated, T2 Generals and APFS.
• Pensioners: T4s, NOAs, pension documents, and bank statements to verify deposits.
• Parents: CCB statements, children’s DOB information, and bank statements to confirm deposits.

Down Payment Verification

We review up to 90 days of bank statements (30 days for some lenders with 20% down payments). Documents include investment statements, RRSPs, TFSAs, FHSAs, property sale documents, or gift confirmations. Deposits over $3,000 must be sourced.

Credit Review

We pull your credit report to identify and correct inconsistencies, ensuring there are no surprises.

While reviewing all this documentation is time-consuming, it allows us to provide clients and REALTOR® partners with solid, reliable pre-approvals. Unlike others, we prioritize accuracy to avoid heartbreaking situations where financial institutions fail to honor their pre-approvals.

Not all pre-approvals are created equal. Choose the team that works hard upfront to treat your money like their own.

This week, OSFI (Canada’s banking regulator) announced an important and sensible adjustment to the mortgage renewal process:

No More Stress Test at Renewal.

Before anyone jumps to conclusions like, “Isn’t that risky?”, let’s break down how mortgage renewals work in Canada:

• Most Canadian residential mortgages are structured as short-term agreements. Over 95% of all mortgages fall within 1-to-5-year terms.
• Because of these short terms, renewing your mortgage with your current lender is usually automatic. There’s no re-underwriting involved.
• When it’s time to renew, borrowers typically receive a renewal letter from their lender offering rates for different term options. The borrower simply picks one—no additional financial scrutiny is required.
• In fact, the current lender doesn’t even check if the borrower is still employed.

Now, if borrowers want to shop around for a better rate, that’s a different story. They have to go through the hassle of providing updated proof of income. Until now, they also had to pass a stress test—a requirement that felt unnecessary and inconsistent, given the lack of income verification from the existing lender during renewal.

This is what has changed.

This change is a huge win for the 12%–15% of borrowers who previously couldn’t shop for better rates because of the Stress Test. Shopping around is critical, especially in today’s environment where almost every renewing borrower is facing higher rates. Now, borrowers have a real opportunity to seek out and secure the most competitive deal available to them.

Why was this necessary?

For five years, OSFI insisted it was dangerous not to Stress Test mortgage renewals—even though they were well aware that lenders didn’t verify income during the renewal process. This inconsistency made the Stress Test a roadblock for borrowers looking to improve their terms.

Interestingly, it wasn’t OSFI but the Department of Finance that pushed for this sensible policy change, finally addressing the gap.

Why did OSFI resist this for so long? That’s a question worth pondering. But for now, let’s celebrate the fact that a flawed policy has been corrected, making the mortgage renewal process fairer and more consumer-friendly.

In a market like today’s, where every percentage point matters, this change empowers borrowers to make better financial decisions and secure the best possible rates. We may be back on track to an era of good mortgage policy.

Thinking Beyond the Mortgage: Financial Planning for Homeowners

When securing a mortgage, it’s easy to focus on rates and payments, but the true cost of homeownership goes beyond just the monthly mortgage. A solid financial plan can help set you up for success. Here are some critical questions to ask:

1. Have You Considered All the Costs? Do you fully understand the costs associated with owning a home? Beyond the mortgage, there are utility bills, home insurance, property taxes, maintenance, and more. Every dollar counts, and planning for these expenses can prevent surprises.
2. Have You Done a Household Budget? A detailed budget can give you clarity on your monthly cash flow. Knowing what you spend versus what you bring in ensures you’re living within your means and can make it easier to manage unexpected costs.
3. What’s Your 3, 5, and 10-Year Plan? Life changes, but having goals can help guide your financial decisions. Whether you plan to move, upgrade, or stay put, knowing where you want to be in a few years can help you make the right financial choices today.
4. Are You Prioritizing Savings and Investments? Building equity in a home is great, but what about your other financial goals? Will you have enough left over each month to contribute to savings, your RRSP, or a TFSA? Planning for the future should be a part of your strategy today.
5. Are You Living Within Your Means? Maintaining a comfortable lifestyle without stretching finances thin is the key to long-term success. Understanding your limits and sticking to them can keep financial stress at bay.

Homeownership is a major step in your financial journey. Make sure you’re prepared for not only today’s costs but also tomorrow’s possibilities. If you’re unsure about any of these points, let’s connect. I’d be happy to discuss how we can help build a mortgage plan that aligns with your long-term financial goals.

Stronger-Than-Expected Jobs Data and Easing Inflation: What Does It Mean for Mortgage Holders?

The Canadian economy has had a surprising turn of events in September, bringing both a boost in employment and a further slowdown in inflation. Statistics Canada reported a robust increase of 46,700 jobs last month, reversing the flat growth seen over the summer. The unemployment rate also saw a slight decline, down to 6.5%, marking its first drop this year. Full-time employment played a significant role, while part-time jobs took a dip. This job growth signals a healthier labor market, even as wage inflation is showing signs of slowing.

On the inflation front, there’s more good news. The Consumer Price Index (CPI) rose by 1.6% in September year-over-year—the slowest pace since February 2021—thanks largely to lower gasoline prices. While inflation is easing, prices remain significantly higher than a few years ago, especially for essentials like food and rent. This creates a mixed environment where Canadians feel the pinch, but policymakers are more optimistic about the path forward.

This economic backdrop places the Bank of Canada at a critical juncture. With inflation below the 2% target and the economy slowing, many experts, including Bruno Valko and Sherry Cooper, believe that larger rate cuts could be on the horizon. Traders have already increased their bets on a half-percentage-point reduction at the Bank’s upcoming meeting on October 23.

For mortgage holders and potential homebuyers, this could be a game-changer. The housing market is already showing signs of stabilizing after three rate cuts, with home sales gradually rising, especially in cities like Toronto, Montreal, and Vancouver. As more rate cuts are expected, mortgage rates may fall further, potentially bringing renewed activity into the housing market by spring 2025.

Stay tuned for the Bank of Canada’s announcement later this month—it could set the stage for the next phase of economic growth and real estate opportunities.

Thank you to Dr. Sherry Cooper and Bruno Valko for their insights!

In today’s fast-paced real estate market, the pressure to make quick decisions can lead some buyers to take risks they wouldn’t normally consider. One of those risks? Making an unconditional offer to purchase a property. While the allure of securing your dream home may push you toward this decision, it’s critical to understand the consequences and ensure you’re fully prepared for the financial and personal obligations that come with it.

What is an Unconditional Offer?

An unconditional offer is a legally binding agreement to purchase a property without including any conditions, such as securing financing or a home inspection. It means that once the seller accepts your offer, you’re committed to completing the purchase, no matter what happens.

Sounds risky? It is. And while it might make your offer more attractive to a seller in a competitive market, significant considerations are involved.

A Real-Life Example: The Risks of Going Unconditional

Let me share a story about a family we recently worked with. They were so eager to secure a home that they submitted an unconditional offer. Despite our advice to include a financing condition, they chose to proceed without it, convinced they had enough time and options to arrange everything before their closing date.

Then, life threw them an unexpected curveball. The main breadwinner of the family  was in an accident and ended up in the hospital. Thankfully, they will recover but will be out of work for a few weeks. However, their mortgage approval package, including the Mortgage Protection Plan (MPP) Life & Disability Insurance, wasn’t signed off yet. This means that if the accident had been more serious, resulting in death or long-term disability, they would have been unable to complete the purchase.

Because they made an unconditional offer, they risk losing not only their deposit but also the home. Worse, they could face legal action. All of this could have been avoided if they had included conditions in their offer or had proper insurance coverage in place.

The Importance of a Mortgage Plan and Manulife MPP

Before making such a major financial commitment, it’s essential to have a well-thought-out mortgage plan. The reality is, that life can be unpredictable, and unforeseen circumstances, such as illness, accidents, or job loss, can affect your ability to meet your financial obligations.

This is where Mortgage Protection Plan (MPP) or other insurance options come into play. MPP can be your main source of credit protection or act as gap insurance, protecting you in the event of unforeseen life events before you can arrange for a more comprehensive, private insurance policy with an advisor. It can ensure that even if life throws unexpected challenges your way, you won’t lose your home or face significant financial repercussions.

Lessons for Buyers and Realtors Like

• Always prioritize your financial security. While the housing market may be competitive, never feel pressured to risk it all by making an unconditional offer without having a proper mortgage plan in place.
• Consider all potential outcomes. What happens if your financing falls through, if an unexpected accident or illness occurs, or if your employment situation changes? These are all scenarios that could leave you unable to complete your purchase, potentially resulting in the loss of your deposit or even legal action.
• Insurance, while optional should be part of your plan. Even if you plan to switch to a more permanent policy later, having an interim plan like MPP can safeguard your financial well-being. Make sure the paperwork is signed and processed before waiving financing or other conditions.

The Bottom Line

Taking the step to purchase a home is exciting, but it shouldn’t come at the cost of your financial security. When making offers—especially unconditional ones—ensure that you’re protected with a solid mortgage plan and appropriate insurance coverage. As the saying goes, “Better safe than sorry.”

If you’re considering making an offer or want advice on how to safeguard your home-buying journey, reach out to discuss your options. We can help create a tailored mortgage plan and ensure you’re fully covered, no matter what life brings.

Today brought a mix of economic data and updates that could shape the future of mortgage rates in Canada. Let’s dive into how these developments, alongside some new government mortgage rule changes, may impact your financial plans.

Good News: Inflation in Canada is Cooling

Canada’s inflation rate dropped to 2.0% in August, the lowest level we’ve seen since February 2021, beating market expectations. With inflation stabilizing, this news sets the stage for potential rate cuts from the Bank of Canada. To give some perspective, pre-pandemic inflation was higher, yet the prime rate stood at 3.95%. This improvement could signal relief for mortgage holders as interest rates may decrease further in the near future.

US Retail Sales Beat Expectations

Meanwhile, U.S. retail sales rose by 0.1% in August—small but above expectations. Given that consumer spending drives nearly 70% of the U.S. economy, this stronger-than-expected data could influence the Federal Reserve’s interest rate decision. While the market had anticipated a 50 bps rate cut, this news might push the Fed towards a more conservative 25 bps cut. Any Fed rate cuts could positively impact Canadian bond yields, making mortgage rates more affordable in Canada.

New Mortgage Rules: Greater Flexibility for First-Time Buyers

In addition to economic factors, the Trudeau government has introduced some significant mortgage rule changes that could improve housing affordability, particularly for first-time buyers:

• 30-year mortgages: Starting in December 2024, first-time buyers will be able to secure 30-year mortgages for newly built homes, extending amortization periods and lowering monthly payments.
• Higher home price cap: Mortgage default insurance will now be available for homes worth up to $1.5 million, a jump from the previous cap of $1 million. This change will enable buyers with less than 20% down payments to bid on more expensive properties.

These changes are expected to increase homebuying opportunities for first-time buyers and help new homebuilders, potentially easing affordability challenges in major cities.

Housing Starts Down in Canada

On the housing front, Canadian housing starts fell sharply in August to 217.4K, down from 279.8K in July. This decline in new builds could signal fewer homes entering the market, potentially slowing down housing inventory growth. However, lower housing starts might also help stabilize home prices in the coming months, which is good news for buyers waiting for the right time to enter the market.

Bond Yield Update

Canadian and U.S. bond yields—a key indicator for fixed-rate mortgages—are trending lower. The 5-year Canadian government bond yield is down to 2.677%, and the U.S. 10-year Treasury yield is sitting at 3.633%. If these bond yields continue to decrease, we could see fixed mortgage rates drop, offering homeowners more favorable refinancing opportunities.

Bottom Line

Between Canada’s cooling inflation, evolving mortgage rules, and shifting economic data, homeowners and buyers are navigating a complex but potentially positive landscape. The new mortgage rules will make it easier for first-time buyers to enter the market, while the potential for further rate cuts might reduce monthly mortgage payments for many Canadians. Stay tuned as these changes unfold and keep an eye on the Bank of Canada’s next moves!

As anticipation builds for the Bank of Canada’s upcoming rate decision, many are speculating whether we will see a cut in the overnight rate. Given the current economic conditions and market signals, I believe there will be a 0.25% rate cut. Here’s why.

Understanding the Current Economic Landscape

The Bank of Canada (BoC) uses the overnight rate as a primary tool to manage monetary policy. Changes to this rate influence borrowing costs across the economy, impacting everything from consumer loans to mortgages. The decision to cut rates often reflects the central bank’s efforts to stimulate economic growth, combat inflation, or address other macroeconomic challenges.

Several factors suggest a rate cut might be on the horizon:

1. Economic Slowdown:
   • Recent economic indicators have shown signs of slowing growth. Leading economic indicators have been weaker than expected, and key sectors such as manufacturing and retail have faced headwinds. A rate cut could provide the necessary stimulus to boost economic activity.
2. Inflation Targets:
   • The BoC aims to maintain inflation within a target of 2%%. With inflation currently trending lower , a rate cut could help keep inflation trending towards the 2% target without causing a recession.
3. Global Economic Conditions:
   • The global economic environment plays a significant role in the BoC’s decision-making process. With ongoing uncertainties, including trade tensions and geopolitical risks, other central banks have adopted more accommodative policies. A rate cut by the BoC would align with this global trend and help maintain Canada’s competitive position.
4. Labour Market Concerns:
   • While unemployment rates remain relatively low, there have been signs of weakening in the labour market, with slower job growth and wage increases. Lowering the overnight rate could help support job creation and wage growth by making borrowing more affordable for businesses.

Potential Impact of a 0.25% Rate Cut

If the BoC announces a 0.25% rate cut, the gradual effects will be felt across various sectors of the economy:

1. Lower Borrowing Costs:
   • For consumers, a rate cut means lower interest rates on loans and mortgages. This can reduce monthly payments, increase disposable income, and boost consumer spending.
2. Business Investment:
   • Lower borrowing costs can also encourage businesses to invest in expansion and new projects, driving economic growth and job creation.
3. Housing Market:
   • The housing market could see increased activity as lower mortgage rates make home buying more affordable. This could be particularly beneficial for first-time homebuyers.  A lower qualifying rate will strengthen their purchasing power.

Why We Believe a Rate Cut is Likely

Given the current economic challenges and the need for stimulus, a 0.25% rate cut appears to be a prudent move by the BoC. The central bank has historically taken preemptive measures to support the economy, and the present conditions warrant such an approach. By lowering the overnight rate, the BoC can provide a much-needed boost to economic growth, support inflation targets, and maintain stability in the financial system.

As we await the Bank of Canada’s decision, the potential for a 0.25% rate cut seems both likely and beneficial given the current economic landscape. A rate cut could help mitigate the risks of a prolonged economic slowdown, support inflation targets, and stimulate growth across various sectors. While the final decision rests with the central bank, the indicators point towards a move that could have far-reaching positive effects for the Canadian economy. Stay tuned for tomorrow’s announcement, which could mark a pivotal moment for Canada’s economic outlook.

For any Mortgage Questions please contact us!

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In recent months, many Canadians have been bracing for significantly higher mortgage renewal rates. With rates climbing 2-3% higher than what they were a few years ago, this can translate into hundreds of dollars added to your monthly mortgage payments. Understandably, this prospect can be daunting. However, there’s good news: you don’t have to feel trapped by these higher rates. Refinancing your mortgage might be the solution you need to manage your financial situation more effectively. Let’s explore how refinancing can help you not only tackle higher renewal rates but also consolidate your debts into one manageable payment.

Understanding the Impact of Higher Renewal Rates

When your mortgage comes up for renewal, the interest rate can significantly affect your monthly payments. For example, if your previous rate was 3% and your renewal rate is now 5%, this 2% increase can add a considerable amount to your monthly expenses. For many households, this increase can strain their budgets, making it more challenging to meet other financial obligations.

Why Refinancing Could Be the Answer

Refinancing your mortgage means replacing your current mortgage with a new one, often with a different lender and potentially better terms. Here are some ways refinancing can alleviate the pressure of higher renewal rates:

1. Lower Interest Rates:
   • While renewal rates may have increased, refinancing could allow you to lock in a lower rate, especially if you shop around and find a lender offering better terms. Even a slightly lower rate can make a significant difference in your monthly payments.
2. Consolidate Debts:
   • If you have other consumer debts, such as credit card balances or personal loans, refinancing allows you to consolidate these debts into your mortgage. By doing this, you can take advantage of the typically lower interest rates of mortgages compared to other types of debt.
3. Reduce Monthly Payments And Improve Cash Flow:
   • By extending the term of your mortgage or securing a lower interest rate through refinancing, you can reduce your overall monthly payments. This can provide some much-needed breathing room in your budget and help you manage your finances more comfortably.

Steps to Refinancing Your Mortgage

1. Assess Your Financial Situation:
   • Before jumping into refinancing, take a close look at your current financial situation. Consider your income, expenses, and any other debts you may have. This will help you understand how much you can afford and what kind of terms to look for in a new mortgage.  You can get a copy of our Mainstream Mortgages Household Budget Worksheet.
2. Consult Dominion Lending Centres Mainstream Mortgages:
   • A mortgage broker can provide valuable insights and help you navigate the refinancing process. They have access to multiple lenders and can help you find the best rates and terms available.
3. Prepare Your Documentation:
   • Gather all necessary documents, such as proof of income, current mortgage details, and information about any other debts you have. Having these documents ready will streamline the refinancing process.  Our online application and document collection process is a dream.
4.  We Will Discuss Your Mortgage Options With You

Facing higher mortgage renewal rates can be stressful, but refinancing offers a way to regain control over your finances. By potentially lowering your interest rate, consolidating your debts, and reducing your monthly payments, refinancing can provide a path to financial stability. If you’re feeling overwhelmed by the prospect of higher payments, consider exploring your refinancing options and consult with a mortgage professional to find the best solution for your situation.

Remember, you don’t have to navigate these challenging times alone—help is available, and refinancing might be just what you need to ease your financial burden.

Contact us today!