Our Ryan Oake explains to be more conscious about your down payment in the blog below. I would like to add that it is very important to review your retirement plan at the same time as your mortgage application. It is key to make sure that the amount of the down payment you do choose will align with your retirement goals.

I hope you enjoy today’s blog

MAKING SMARTER DOWN PAYMENTS
Mortgage Insurance Premiums. Many people know what they are- an extra cost to you the borrower. But not many people realize how they are calculated. Understanding the premium charges and how they are calculated will help lead you to making smarter down payments.

5%- 9.99% down payment of a purchase price is a 4% premium
10%- 14.99% down payment of a purchase price is a 3.10% premium
15%- 19.99% down payment of a purchase price is a 2.8% premium
So, that means with a $300,000 purchase price and a $30,000 down payment (10%), you would have a 3.10% premium added to your mortgage, making your total mortgage amount $270,000 + $8,370 for $278,370 total. The $8,370 being 3.10% of your original $270,000 mortgage.

Now let’s say you have a down payment potential of $60,000 and have the income to afford a $350,000 purchase price but you found one for $325,000. Using your entire $60,000 down payment (18.46%), your new mortgage amount would be $272,420, where $7,420 of it represents the mortgage insurance premium.

But what if you change that $60,000 (18.46% down payment) to say $48,750 and have a down payment of exactly 15%? Well, your premium is still the exact same as it would be with an 18.46% down payment because your premium is still 2.8% of the mortgage amount. That means you will now save $11,250 (difference in down payments), while only paying $7,735 in premiums (an increase of $315).

I don’t know about you, but if someone told me I could put $11,250 less down and it would only change my insurance premium by $315, I am holding onto that money. You now have more cash for unexpected expenses, moving allowance, furniture, anything you want. You can even apply it to your first pre-payment against your mortgage and pay the interest down while taking time off your loan. Obviously if cash is not an issue, putting the full $60,000 would be better seeing as you are borrowing less and paying less interest. However, if cash is tight, why not hold onto it and pay that difference over the course of 25 years?

Consult with a Dominion Lending Centres mortgage professional when it comes to structuring your mortgage request with a bank. It is small little things like this that make all the difference.

Ryan Oake

Dominion Lending Centres – Accredited Mortgage Professional
Ryan is part of DLC Producers West Financial based in Langley, BC

Getting a commercial mortgage is a tricky business to begin with. Commercial Mortgage Brokers, do not have any magic wants when it comes to commercial mortgages. We do however have access to alternative lenders. Please read below our DLC Colleague’s blog.

Need A Commercial Mortgage?

If you’re an entrepreneur, business person or commercial investor then you probably have or need a commercial mortgage.

Where should you start?

Do you call your bank, or do you call a commercial mortgage broker?

I recommend you call your bank.

Yes, that’s right; I’m a commercial mortgage broker and I am telling you to start with your bank (unless you are already out of time).

Most business people have financial resources, a good credit rating and a relationship at a chartered bank or credit union.

Common sense says: start with a commercial account manager at your bank. Take your documents with you: financial statements, your mortgage request (written down), latest appraisal (if completed) and any lease agreements. Tell your account manager you want indicative rates and fees before moving forward with a mortgage application.

Spend thirty minutes in the manager’s office, no longer. Do this quickly; don’t waste time. After all, this is just one lender and you have no idea whether your bank is competitive or even if it wants to do the loan. Tell your banker you need an answer in two days. If the account manager cannot give you an indicative rate and fees in a short timeframe, you are speaking with someone who will ultimately cause you headaches down the road.

Once you have the bank’s rates and fees, it’s time to verify the information with a commercial mortgage broker who has access to multiple lenders. Now, you could call ten lenders yourself, but again, common sense says that would be a waste of time.

Call your friendly neighborhood Dominion Lending Centres commercial mortgage broker

Depending on who you call, the commercial mortgage broker will do one of three things:

• ask you to sign a representation agreement,

• give you a song and dance about the low rates they have achieved for clients, or

• tell you the truth.

Top commercial mortgage brokers cut to the truth.

Why? They are busy. They don’t waste time on deals they can’t close.

As a commercial mortgage broker, it makes no sense to sign a representation agreement until I know I can add value. Step one is simply to determine whether the mortgage is bankable. To do this, I need documents. Yes, top commercial mortgage brokers are like bankers. With the right information, transactions can be digested in 20 minutes and can be summarized in six pages or less.

Top commercial mortgage brokers say things like:

• Tell me about your deal in 5 minutes or less; nature of transaction, deal size, legal structure, cash flow, quality of financials and timeline.

• What documents can you send me? I’ll review them in 24 hours and call you back.

• Have you called your bank yet? What rate did they give you?

Tell your commercial broker the truth. If your bank offered 4.5% fixed for 5 years then say so. Why? Because no one wants to waste time. Your commercial mortgage broker doesn’t set the rates; the lenders do. Your commercial mortgage broker knows when a rate makes sense and whether lower rates are available. For example, if I can’t save you 25 basis points (that’s 0.25% per year), the reality is, by the time we pay to move the mortgage to another lender, you’re probably better off taking your bank’s initial offer.

Top commercial mortgage brokers understand this, and they will be truthful with you.

“Hey, if you have 4.5% fixed in this market for that building, in that area; take it, don’t hesitate; it’s a good deal.” I say this to entrepreneurs who call. It serves no one to enter an agreement that won’t add value. In fact, its our fiduciary duty to tell you.

Some entrepreneurs say they already have good rate (even when they don’t). “Oh, my bank offered me between 4.6 and 5.2%.” The thinking being, if they imply they have 4.6%, then the broker will work even harder to get a lower rate.

Beep. Wrong.

Brokers don’t set the rates; lenders do. This just muddies the water. If the broker thinks you already have a good rate (and best-in-market is 4.5%, only 10 basis points less), then the broker will move on right away.

About Commercial Mortgage Brokers

All a commercial mortgage broker wants, is serve you; and that means delivering the best rates and terms. There is no financial incentive for a broker to hold back information or low rates. Similarly, holding back your bank’s interest rate just wastes everyone’s time, including yours.

As a commercial mortgage broker, if I think I help you, I’ll tell you right away. I’ll review the deal quickly, determine if its bankable and touch base with a few lenders. If lenders express interest, I’ll call you to discuss what they told me.

Transparency and open communication are the keys to saving time and to getting the most from your commercial mortgage broker.

If you are getting a runaround and want the straight scoop, call me.

Pierre Pequegnat
PIERRE PEQUEGNAT
Dominion Lending Centres – Principal Broker

TIPS FOR YOUR VARIABLE RATE MORTGAGE THAT COULD SAVE YOU THOUSANDS
With changes to mortgage rules and interest rates on the rise here are some tips for your variable rate mortgage that could save you thousands.

Since 2009 the prime lending rate has shifted from a high of 6% down to 2% range remaining fairly level for the past few years before rising to a present day level of 3.45%. During that time, lenders have offered consumers high discount variable mortgage as low as 1.2% when rates were at their lowest, to current rates of 2.45 (depending on the lender and if the mortgage is insured or not).

Historically the choice of a variable rate mortgage over a fixed term has allowed borrowers to save in interest costs.

I always recommend if my clients can qualify and it makes sense for their specific situation to choose variable only if they will take full advantage of the lower rate. By setting their payment to the equivalent of the 5 year fixed rate at the time, the difference in payment goes directly to principal pay down.

Every 10% increase in payment shaves three years off the amortization of a five-year term so every bit extra matters and can make a difference.

If your mortgage is maturing in the next 90-180 days, it is time to talk to your Dominion Lending Centres mortgage professional for tips for your variable rate mortgage that could save you thousands.

You may feel the pressure to lock in to a fixed rate after the recent increases in the prime lending rate. For some this may be an option. However, I have the same advice every time someone asks me this question: It depends on your situation and we need to do a review. Take the extra time to review the current rate, remaining term of the mortgage, the new offer, how that will impact payments and your plans for staying in your home, moving and/or if this is an investment property.

For example Amy and Jake have a current balance of $300,000 on their mortgage with a variable rate at Prime minus .80% (2.65%). Current payments set at $703 bi-weekly. The mortgage matures in 24 months but they are considering to lock in for a new five-year term offered at 3.34%. New payments would be $739. They love their condo but not sure if they will stay or move in two years or not.

After a review of their mortgage we offer a second option. Keep the remaining variable rate mortgage in place for the remaining two years. Set payments at 3.34% or $739 bi-weekly.

They decide on this second option because:

In 24 months the savings on interest is $4,000 and their outstanding balance is $4,000 less than by staying in the fixed rate
They won’t be locked into a mortgage for another five years
If they choose to sell before the maturity date, the penalty on a variable mortgage is only three months interest
In two years they can either choose to stay with the same lender or move to another lender without penalty
With this strategy they don’t have to feel pressured into locking in today and they can continue to take advantage of the lower variable rate.

So if you are in a variable rate mortgage and not sure what to do. Remember my tips for your variable rate mortgage that could save you thousands.

Pauline Tonkin
PAULINE TONKIN
Dominion Lending Centres – Accredited Mortgage Professional
Pauline is part of DLC Innovative Mortgage Solutions based in Coquitlam, BC

In 2008, the Federal Government started making some changes to how mortgage applications are approved in Canada. I think it important to recap some of these changes.

Prior to the first rule change:
– No down payment required – finance 100%
– Maximum amortization was 40 years.
– Refinance up to 95% the value of your home.
– With excellent credit scores 680+, you could have a Total Debt Service Ratio (TDSR) of
49%
– Minimum credit score for CMHC was 580.

Fall 2008:
– Reduction of maximum amortization from 40 years to 35 years.
– Introduction of a minimum score for Insured mortgages of 620 (But lower scores were
considered on an exception basis).
– 100% financing was eliminated. (However, you could still use a Cash Back Mortgage for
down payment).
– Maximum TDSR lowered to 45%.

Spring 2010:
– Stricter rental property guidelines. The amount of rent for income/debt servicing
purposes was reduced from 80% to 50%.
– A Mortgage Qualifying Rate was introduced for all insured mortgages on all variable
terms and all fixed rate mortgage terms 4 years and less. (5-year fixed rate mortgages
were still allowed to qualify at the contract rate).
– Rental Mortgage down payment minimum was raised from 10% to 20%.
– Insured refinances reduced from 95% Loan to Value to 90%.

Spring 2011:
– Insured Home Equity Lines of Credit discontinued.
– Insured refinances further reduced from 90% Loan to value to 85%
– Maximum amortizations lowered further from 35 years to 30 years.
Summer 2012:
– Implementation of a New Gross Debt Service Ratio maximum of 39%
– Refinance loan to value reduced further from 85% to 80%
– Maximum amortization reduced from 30 years to 25 years for insured mortgages.

Not bad for 4 years worth of work. Now the OSFI (Office of the Superintendent of Financial Institutions) changes begin with the B-20 and B-21 Legislation. This occurred between fall 2012 and spring 2013.

OSFI B20 – 2012-2013:
– A new maximum Loan to Value for Home Equity Lines of Credit of 65%, down from 80%.
– The Bank of Canada’s qualifying rate is now applied to all variable and fixed rate
mortgage terms of 4 years or less for conventional mortgages.
– Self-employed borrowers are mandated to provide reasonable income verification. Stated
Income Programs disappear.
– Cashback mortgages are no longer permitted to be used for down payment.

OSFI B21 – Winter 2014:
– Tighter regulations around how to calculate payments on Secured and Home Equity Secured
Lines of Credit.
– All revolving credit payments for debt servicing are now calculated at 3% of the
outstanding balance instead of the interest-only payments. For example, a $10,000 credit
card balance would now have a qualifying payment $300/month up from about $45/month.
Are you feeling a little mad, disappointed or discouraged yet? Now for the greed. For
the next part of this article, remember that default rates in Canada have almost always
been below 0.5%.

Summer 2015:
– Default Mortgage Insurers increase premiums. At a 90.1% – 95% Loan to Value the premium
increased from 3.15% to 3.6%. This cost to consumers would be an additional $1,350 of
default insurance on a $300,000 mortgage.

New Year 2016:
– Increase to the minimum down payments for mortgage amounts between $500,000 and
$999,999.

Fall 2016:
– Mortgage Insurance limited to purchase prices not exceeding $999,999
– Insured refinances were eliminated altogether.
– To avoid the abuse of capital gains exemptions, foreign property owners need to prove
that they are selling a primary residence.
– The mortgage stress test expands to 5-year term mortgages but excluded uninsured
conventional mortgages.

Happy New Year’s 2017:

– Insurers realized revenues are down from all the previous changes and increase premiums
AGAIN! With a 5% down payment, the mortgage insurance premium jumped from 3.6% to a
WHOPPING 4%. This means that you as a homeowner would have a mere 1% equity interest in
your home.

Jan 2018:
Allconventional mortgages will need to qualify with their own stress test or
the contract rate +2.0%. So that means that if the 5-year fixed rate is 3.49%, you
would have to qualify at a rate of 5.49%.

All these changes. How did it affect consumers? It made buying a home and qualifying for a mortgage way more difficult, it has affected purchasing power by about 45% from pre-2008 up until today.

If you are looking for a mortgage professional I would be happy to help you.

Peter Paley.

Fixed Interest Rates

This is usually the more popular choice for clients when it comes to deciding on which type of interest rate they want. There are many reasons why, but the most unsurprising answer is always safety. With a fixed interest rate, you know exactly what you are paying every month and you know that the amount of interest being charged for the term of your mortgage will not increase and it will not decrease. Fixed interest rates can be taken on 1-year, 2-year, 3-year, 5-year, as well as 7 and 10-year terms. Please note, term is not meant to be confused with amortization. When you have a 5-year term but a 25-year amortization- the term is when your mortgage is up for renewal, but it will still take you the 25 years to pay off the entire debt. The biggest knock on fixed interest rates when it comes to mortgages, especially 5-year terms, is the potential penalty. If you want to break your mortgage and pay it out, switch lenders, take advantage of a lower rate, or anything like this and your term is not over, there will be a penalty. With a 5-year term, a fixed rate penalty can be anywhere from $1,000- $20,000 or more. It all depends on the lender’s current rates, what yours currently is, the length of time remaining on your term, and the balance outstanding. The formula used is called an IRD (interest rate differential) and the penalty owed will either be the amount this formula produces or three month’s interest- which ever is greater. Fixed interest rates, especially 5-year terms can be the most favourable. They are safe, competitive interest rates that you will not need to worry about changing for the term of your mortgage. However, if you do not have your mortgage for the entire term, it could hurt you.

Variable Rate Interest

The Bank of Canada sets what they call a target overnight rate and that interest rate influences the prime rate a lender offers consumers. A variable rate, is either the lender’s prime lending rate plus or minus another number. For example, let us say someone has a variable interest rate of prime minus 0.70. If their lender’s prime lending rate is 5.00% in this example, they have an effective interest rate of 4.30%. However, if for example the prime rate changed to 6.00%, the same person’s interest rate would now be 5.30%. Written on a mortgage, these interest rates would look like P-0.7. Variable interest rates are usually only available on 5-year terms with some lenders offering the possibility of taking a 3-year variable interest rate. When it comes to penalties, variable interest rates are almost always calculated using 3-months interest, NOT the IRD formula used to calculate the penalty on a fixed term mortgage. This ends up being significantly less expensive as breaking a 5-year term mortgage at a fixed rate of 3.49% with a balance of $500,000 will cost approximately $15,000. That is if you use the current progression of interest rates and broke it at the beginning of year 3. A variable interest rate of Prime Minus 0.5% with prime rate at 3.45% will only cost $3,800. That is a difference of $11,200. You can expect to pay this kind of amount for the safety of a fixed rate mortgage over 5-years if you break it early.

Which one is best?

It completely depends on the person. Your loan’s term (length of time before it either expires or is up for renewal) can be anywhere from a year to 5 years, or longer. A first-time home buyer typically has a mortgage term of 5 years. Within those 5 years, the prime rate could move up or down, but you won’t know by how much or when until it happens. Recently, variable rates have been lower than fixed rates, however, they run the risk of changing. With fixed interest rates, you know exactly what your payments will be and what it will cost you every month regardless of a lender’s prime rate changing. If you go to the site www.tradingeconomics.com/canada/bank-lending-rate you can see the 10-year history of lender’s prime lending rate. Because lenders usually change their prime lending rate together to match one another (except for TD), this graph is a good representation. As you can see, from 2008 to 2018, the interest rate has dropped from 5.75% to 2.25% all the way back up to 3.45%. Canada has had this prime lending rate since 1960, and in that time it has seen an all-time high of 22.75% (1981) and all-time low of 2.25% (2010). Whether you want the risk of variable or the stability of a fixed rate is up to you, but allow this information to be the basis of your decision based on your own personal needs. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Ryan Oake
RYAN OAKE
Dominion Lending Centres – Accredited Mortgage Professional

Collateral Mortgage Charges – The Facts

As the financing world changes with tighter policies, new regulations and tougher qualifications, I feel it is very important to revisit some information surrounding Collateral Mortgage Charges.
A collateral mortgage charge according to The Financial Consumer Agency of Canada website is;
Collateral charge

A collateral charge can be used to secure multiple loans with your lender, including a mortgage and a line of credit.

The charge can be registered for an amount that is higher than your actual mortgage loan. This allows you to potentially borrow additional funds on top of your original mortgage loan in the future without having to pay fees to discharge your mortgage and register a new one. You only have to make payments, including interest, on the money you actually borrow.
A new charge will only be required if you want to borrow more than the amount that is registered on the original charge. You’ll still need to apply for additional money and re-qualify.
Changing lenders when you have a collateral charge

A collateral charge may make it more difficult to switch lenders at the end of your term. Some lenders may not accept the transfer of your collateral charge mortgage.
To change lenders you’ll need to discharge your mortgage. You’ll need to repay, or transfer to the new lender, all loans you’ve secured with a collateral charge. This may include car loans or lines of credit. You may also have to pay fees such as legal, administrative, discharge and registration costs. Check with your lender for details and if any discounts are available to you.

https://www.canada.ca/en/financial-consumer-agency/services/mortgages/choose-mortgage.html

This type of registration is becoming more and more popular with The BIG banks and Credit Unions alike. There are a few reasons why financial institutions are switching to this. I’ve made a pro/con list for you to help you decide whether this may or not be good for you.

PROS:

1). Mortgage is registered at a higher amount to allow for future borrowing. This means if you had to remortgage in the future either for a refinance or a Home Equity Line Of Credit that you wouldn’t have to re-register the mortgage and pay legal fees.

CONS:

1). All you debt with your lender can now be attached to your mortgage. A lender will usually use the term ‘all indebtedness’. This means that your car loan, credit card and even your overdraft protection can be linked to your mortgage. This means that you have a risk of foreclosure for any other piece of debt held at that Financial Institution. Yes, you can be foreclosed on for missing your credit card payment.

2). The mortgage will be more costly to transfer at renewal if necessary. Typically a collateral mortgage charge will need to be discharged and reregistered should you decide to change lenders.

3).The renewal rates typically offered on collateral mortgages seem to be higher than they should be.

I often get questions from my clients asking if the Collateral Mortgage Charge is bad? The short answer is no. It is not bad. However, if your lender is registering the mortgage this way it is important that you understand how the mortgage charge works and understand that it will limit you in the future.

I usually recommend that if a mortgage has a collateral charge that the client ensure that they limit the amount of credit that they have at that lender. For example, Mr. and Mrs. Mortgage have their Mortgage, personal line of credit, car loan and two credit cards at BANK ABC. I make the recommendation, that they either move their mortgage to another lender or see if they can move some of their personal credit to another lender. There have been cases, where people have been put into foreclosure for some bad credit card debts. Unreasonable? Maybe. This scenario can even get more complex if the borrowers are self-employed and have their small business bank accounts with that collateral charge lender.

That’s why it is important that you always come to your friendly neighbourhood mortgage professional for any advice surrounding your mortgage. We will always put our client’s best interests FIRST and can usually save you $1000s of dollars in unnecessary interest and fees.

Peter Paley

If you have mortgage & real estate questions, we have the answers. Join us November 22nd for a very informative information session about your real estate and home financing options. Please follow the link to register. https://dominionlending.worldsecuresystems.com/first-time-home-buyers

Here we are again on the brink of more mortgage rule changes. Federal regime after federal regime has been tightening our mortgage rules for about 10 years. Granted, it is worth noting that previous mortgage qualification rules were arguably loosey-goosey and some prudent changes were necessary. Now they are becoming almost impossible and some may say elitist. I would like an opportunity to recap the rule changes over the last decade.
Prior to the first rule change:
– No down payment required – finance 100%
– Maximum amortization was 40 years.
– Refinance up to 95% the value of your home.
– With excellent credit scores 680+, you could have a Total Debt Service Ratio (TDSR) of
49%
– Minimum credit score for CMHC was 580.

Fall 2008:
– Reduction of maximum amortization from 40 years to 35 years.
– Introduction of a minimum score for Insured mortgages of 620 (But lower scores were
considered on an exception basis).
– 100% financing was eliminated. (However, you could still use a Cash Back Mortgage for
down payment).
– Maximum TDSR lowered to 45%.

Spring 2010:
– Stricter rental property guidelines. The amount of rent for income/debt servicing
purposes was reduced from 80% to 50%.
– A Mortgage Qualifying Rate was introduced for all insured mortgages on all variable
terms and all fixed rate mortgage terms 4 years and less. (5-year fixed rate mortgages
were still allowed to qualify at the contract rate).
– Rental Mortgage down payment minimum was raised from 10% to 20%.
– Insured refinances reduced from 95% Loan to Value to 90%.

Spring 2011:
– Insured Home Equity Lines of Credit discontinued.
– Insured refinances further reduced from 90% Loan to value to 85%
– Maximum amortizations lowered further from 35 years to 30 years.
Summer 2012:
– Implementation of a New Gross Debt Service Ratio maximum of 39%
– Refinance loan to value reduced further from 85% to 80%
– Maximum amortization reduced from 30 years to 25 years for insured mortgages.

Not bad for 4 years worth of work. Now the OSFI (Office of the Superintendent of Financial Institutions) changes begin with the B-20 and B-21 Legislation. This occurred between fall 2012 and spring 2013.

OSFI B20 – 2012-2013:
– A new maximum Loan to Value for Home Equity Lines of Credit of 65%, down from 80%.
– The Bank of Canada’s qualifying rate is now applied to all variable and fixed rate
mortgage terms of 4 years or less for conventional mortgages.
– Self-employed borrowers are mandated to provide reasonable income verification. Stated
Income Programs disappear.
– Cashback mortgages are no longer permitted to be used for down payment.

OSFI B21 – Winter 2014:
– Tighter regulations around how to calculate payments on Secured and Home Equity Secured
Lines of Credit.
– All revolving credit payments for debt servicing are now calculated at 3% of the
outstanding balance instead of the interest-only payments. For example, a $10,000 credit
card balance would now have a qualifying payment $300/month up from about $45/month.
Are you feeling a little mad, disappointed or discouraged yet? Now for the greed. For
the next part of this article, remember that default rates in Canada have almost always
been below 0.5%.

Summer 2015:
– Default Mortgage Insurers increase premiums. At a 90.1% – 95% Loan to Value the premium
increased from 3.15% to 3.6%. This cost to consumers would be an additional $1,350 of
default insurance on a $300,000 mortgage.

New Year 2016:
– Increase to the minimum down payments for mortgage amounts between $500,000 and
$999,999.

Fall 2016:
– Mortgage Insurance limited to purchase prices not exceeding $999,999
– Insured refinances were eliminated altogether.
– To avoid the abuse of capital gains exemptions, foreign property owners need to prove
that they are selling a primary residence.
– The mortgage stress test expands to 5-year term mortgages but excluded uninsured
conventional mortgages.

Happy New Year’s 2017:

– Insurers realized revenues are down from all the previous changes and increase premiums
AGAIN! With a 5% down payment, the mortgage insurance premium jumped from 3.6% to a
WHOPPING 4%. This means that you as a homeowner would have a mere 1% equity interest in
your home.

Fall 2017:
– It is announced that in January 2018 that all conventional mortgages will need to
qualify with their own stress test which will be the contract rate +2.0%. So that means
that if the 5-year fixed rate is 3.49%, you would have to qualify at a rate of 5.49%.

Now to get to the main issue. HOW IS THIS AFFECTING CANADIANS? These mortgage rule changes started out as a prudent measure to ensure that Canada wouldn’t fall victim to a US-style housing market crash. In the beginning, the changes made sense, and the markets and economy started to recover after 2007/2008. However, the changes kept coming and many would say that they snowballed out of control. We repeatedly kept hearing that Canadians’ Debt-to-Income ratios were out of control – 150%, 160%, and even 170% depending on who was talking and the criteria they used. So instead of limiting the real culprits of this phenomenon (Credit card companies and other unsecured lenders who charge up to 39.9% interest), the Canadian government took aim at home buyers, homeowners and the mortgage industry instead of the lending practices of these high-interest rate lenders. It is my opinion that the recent steps taken by OSFI and the Canadian Government are like “curing the disease by killing the patient”.
Let’s take a look at one of our clients, Jane. Jane purchased her home in 2013. She purchased a beautiful small home in one of Winnipeg’s up and coming neighbourhoods. She was an excellent, hardworking borrower with excellent credit. Now in 2017, she has a HUGE problem. She would like to refinance to do some upgrades and necessary repairs. Is she able to refinance her mortgage to accomplish her goals? NO. When the Canadian government/OSFI mandated that the insurers were no longer able to provide default insurance for refinances, this put people like Jane in a terrible spot. Unfortunately for her, the neighbourhood in which she lived was designated a “RED ZONE” by most lenders. This means that lenders would not lend in the neighbourhood without mortgage default Insurance. The lenders who would lend in the area, have implemented square footage minimums as high as 750sqft. In fact, Jane’s own bank who already holds the mortgage decided to decline her application based on these criteria alone. So, what is she to do? Take out a high interest and expensive 2nd mortgage? Sell her home? Or get a separate loan with high payments? We don’t really know the answers to these questions. However, we do know that bad policy is devastating the middle class.
What will happen to the thousands of other people that are in a similar situation? What is going to happen to the up and coming and gentrifying Canadian neighbourhoods? Will new policies be created to fill this very serious gap? Will the Canadian government admit to these alleged errors and that they may have gone too far? Will they take the steps to limit the predatory unsecured and credit card lending? Are these policies going to be the death of the Canadian homeownership dream? If Canadians are unable to look after their homes properly, are we headed to American style slums?
Only time will time will tell. I’m sure that if the government has gone too far that they will pay for it in the polls.
If you are seeking mortgage advice or require a 2nd opinion, please contact me.

One of the best-kept secrets in the mortgage industry is the Owner Occupied Rental Program.  Did you know, that anyone can buy and owner-occupied duplex, tri-plex or even a four-plex with only 5% down?  It’s true!  The best part is that many lenders will allow you to use 100% of the rent to help you pay/qualify for your mortgage.

With rental prices sky-rocketing across the country, this is a great way to get your first home and build equity fast.  As I write this I’m sitting in one of my rental properties hosting an open house in hope of renting it out ($16oo/month).   Rental properties an excellent way to build equity, earn income and gain your financial independence.

If you earn $50,000 per year (and have no debt), under the new mortgage qualification rules you would qualify for a purchase price of approximately $260,000 with 5% down payment.   However, if you consider and owner occupied duplex your situation changes dramatically.   You can now afford a duplex worth about $350,000.  We are assuming a rental income of approximately $1500/month.  This rental income would mean your adjusted mortgage payment would be under $200/month.

This is how I started building my own rental portfolio.

Please contact me for more information.

So, you want to buy a house?   You need information that is accurate and up-to-date.  Many first time home buyers start googling on the internet.  It is very easy to get confused and overwhelmed with the amount of information available.  Fixed rates, variable rates, CMHC, Genworth, 5% down, 20% down, insured, conventional, collateral charges…. and many many other terms.

After you contact your friendly neighbourhood mortgage professional. and get pre-qualified and understand the process.  Start by going to open houses in the local area.  Get a feel for what you like, what prices are and it is also a great way to interview REALTORs to see if you want them representing you.

If you see a property that you like you can send your mortgage professional the feature sheet and listing information and see how much the monthly payment would be, the rate you would qualify for and get all of your documents together for an official pre-approval.