Mortgage Broker Industry

27 Jul

CMHC CHANGES TO ASSIST SELF-EMPLOYED BORROWERS

Latest News

Posted by: MANJIT SINGH BHONDHI

As a self-employed person myself, I was happy to hear that CMHC is willing to make some changes that will make it easier for us to qualify for a mortgage.
In an announcement on July 19, 2018, the CMHC has said “Self-employed Canadians represent a significant part of the Canadian workforce. These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates.” — Romy Bowers, Chief Commercial Officer, Canada Mortgage and Housing Corporation. These policy changes are to take effect Oct. 1, 2018.

Traditionally self-employed borrowers will write as many expenses as they can to minimize the income tax they pay each year. While this is a good tax-saving technique it means that often a realistic annual income can not be established high enough to meet mortgage qualification guidelines.
Plain speak, we don’t look good on paper.

Normally CMHC wants to see two years established business history to be able to determine an average income. But the agency said it will now make allowances for people who acquire existing businesses, can demonstrate sufficient cash reserves, who will be expecting predictable earnings and have previous training and education.
Take for example a borrower that has been an interior designer with a firm for the past eight years and in the same industry for the past 30 years, but just struck out on his own last year. His main work contract is with the firm he used to work for, but now he has the ability to pick up additional contracts from the industry in which he has vast connections.
Where previously he would have had to entertain a mortgage with an interest rate at least 1% higher than the best on the market and have to pay a fee, now he would be able to meet insurance requirements and get preferred rates.

The other change that CMHC has made is to allow for more flexible documentation of income and the ability to look at Statements of Business Professional Activity from a sole-proprietor’s income tax submission to support Add Backs of certain write-offs to support a grossing-up of income. Basically, recognizing that many write-offs are simply for tax-saving purposes and are not a reduction of actual income. This could mean a significant increase in income and buying power.

It is refreshing after years of government claw-backs and conservative policy changes to finally see the swing back in the other direction. Self-employed Canadians have taken on the burden of an often fluctuating income and responsible income tax management all for the ability to work for themselves. These measures will help them with the reward of being able to own their own home as well.

– KRISTIN WOOLARD

30 Nov

MISCONCEPTIONS OF A CHIP MORTGAGE

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

Many homeowners have beliefs about how a CHIP Mortgage works but are not clear on the main benefits and protection offered by the program.

Top 3 Misconceptions About a CHIP Mortgages:

1. The Bank Owns Your Home.

Over 50% of Canadian homeowners over the age of 65, believe the bank owns your home once you’ve taken a reverse mortgage. Not true! The bank simply registers their position on the title of the home the same as any other bank would register a mortgage. The difference is in the collection of payments on the mortgage. With a CHIP Mortgage the home owner does not have to make payments. The mortgage payments can be capitalized back into the mortgage. The full amount of principal and interest is payable when the home is sold or the homeowner(s) die.

2. Your Estate Can Owe More Than Your Home

A CHIP mortgage cannot seek any further compensation from the borrower – even if the collateral asset (property) does not fully cover the full value of the loan upon payout of the mortgage. Therefore, when the last homeowner dies (and the reverse mortgage is due), the estate will never be responsible for paying back more than the fair market value of the home. The estate is fully protected – this is not the case for almost any other mortgage loan (specifically secured lines of credit) in Canada, which is full recourse debt.

3. The Best Time to take a Reverse Mortgage is at the End of Your Retirement

  •  91% of Canadian seniors have no plans to sell their home (CBC News “Canadian Boomers Want To Stay In Their Homes As They Age).
  •  You are missing out on a huge tax-saving opportunity by not taking out CHIP mortgage in the beginning of your retirement.

“Research has consistently shown that strategic uses of reverse mortgages can be used to improve a retiree’s financial situation, and that reverse mortgages generally provide more strategic benefits when used early in retirement as opposed to being used as a last resort.” – Jamie Hopkins, Forbes

In Canada, a CHIP reverse mortgage can be set-up to provide homeowners with a monthly draw out of the approved amount. For example: client at age 65 is approved for $240,000 and decides to take $1000/month. This is deposited into the clients’ bank account over the next 20-years. They use those funds to increase their monthly cash flow or invest the money till they turn 71. Interest accumulates in the CHIP Mortgage only on the amount drawn (i.e.: not on the full dollar amount at the onset).

This strategy allows clients to draw down less income from their savings/investments to support their retirement lifestyle. In turn, this can create some excellent tax savings, since home equity is non-taxable. Imagine lowering your nominal tax bracket by 5 – 10% each and every year over a 20 year period! The tax savings can be huge. You are also able to preserve your assets allowing them to grow which can generate a higher rate of return when invested over a greater period of time.

For more information on the CHIP Mortgage or to review your financing needs before or during retirement contact your Dominion Lending Centres Mortgage Specialist.

PAULINE TONKIN

Dominion Lending Centres – Accredited Mortgage Professional

28 Nov

WHY THEY’RE NOT REALLY IN THE MORTGAGE BUSINESS

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

Often, when we talk to you about mortgages, Mortgage Professionals will provide you a set of choices involving banks, credit unions and single service mortgage providers called a “Monoline” and a recommendation.

Many times, if it’s a good fit, we recommend a Monoline, as your first option.

It’s important to recognize the differences between the two, Monoline and Bank, because they are very different businesses and how they approach mortgages can have a very significant impact on you.

Monoline mortgage companies are in the business of providing nothing but competitive mortgages to you, your family and friends. It’s important to stress that they offer competitive mortgage products. As a group, they provide great rates and more importantly, flexible mortgage repayment terms, all in an effort to be competitive.
They want your mortgage business because it’s their sole business line and they want to do well, both for you and for their investors.

The big banks are not in the mortgage business. They are in the financial services business. It’s very important to understand that their focus is not about being competitive in the mortgage business.

“Huh?” I know, it doesn’t seem to make a lot of sense, but let me explain…

When you work at a bank, you hear all the time that the bank doesn’t make any money on its mortgage portfolio. You come to see how true this is when you see the incredible focus that a bank has on minimizing costs, how it’s almost impossible for you to step out of the normal process to help clients with special circumstances.

Because maximizing profit is the true goal of minimizing costs, every bank follows the “Golden Mean”.

In art, the Golden Mean is a strict proportional guideline for creating great art.

For a bank, the Golden Mean of profit is the strict proportion of average products and services per client. Their golden number is that each client has an average of more than of 2.75 products and services. For example, if you have a chequing account, a mortgage and a Visa, you’re profitable for the bank. Move any one of those and you’re not profitable anymore.

The intense focus on profit and managing costs means you pay more for mortgage financing. Not on something as obvious as interest rate, but on the options. Say for example you’re in a fixed rate mortgage and you need to pay out your $350,000 mortgage out before the five year term expires. Its not that uncommon, probably two in five of you reading this will do it.

If you were to pay out two years into a five year term, depending on who you’re dealing with, the penalty can be a little as $1,500 or as much as $13,000 depending on the lender you choose. Banks typically charge higher penalties because they’re not in the mortgage business – they don’t need to be competitive and also as a way to closely manage costs.

This post and some of the recent articles you’ve seen floating around may lead you to think that your average Canadian Bank is a manifestation of Mr. Robot’s Evil Corp. They’re not; managing costs is what drives profit for them – saving 10 cents means 3 dollars more profit – so even phone to phone contact for them is considered an extra cost.

The most important thing for you to remember is that they’re not really in the mortgage business, that’s why you need to connect with a Dominion Lending Centres mortgage specialist – to understand all your options.

If you want more information on this or mortgage financing in general, please give a DLC mortgage specialist a call today.

JONATHAN BARLOW

Dominion Lending Centres – Mortgage Professional

15 Nov

I’VE NEVER HEARD OF THAT LENDER BEFORE

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

One of the benefits of working with an independent mortgage professional; compared to getting your mortgage through a single institution, is choice. And as there are even more mortgage rules coming into place January 1st 2018, now more than ever, having access to a wide variety of mortgage products is going to ensure you get the mortgage that best suits your needs.

Working with an independent mortgage professional will give you access to varying products from many different lenders, some of these lender you may have never even heard of, but that’s okay. Sure, RBC, BMO, and CIBC, are more household names compared to say, MCAP, RMG, or Merix Financial, but as each lender has a different appetite for risk (there is always a risk when lending money) how do you know which lender is going to have the products that are going to be the best fit for you?

Typically the conversation develops into something like this: “I’ve never heard of this lender before, are they safe, I mean… I have no idea who they are”? And although that is a valid question, there is a simple answer. Yes. Yes they are safe. All the lenders we work with are reputable and governed by the same regulator as the big banks. Ultimately, you have their money, they don’t have yours!
But let’s answer a few of the common questions often asked about these lenders accessed only through an independent mortgage professional.

Why haven’t I heard of any of these lenders?
Instead of spending all their money on huge marketing campaigns (like the Canadian big banks) which drives up the cost of their product, broker channel lenders rely on competitive products and independent mortgage professionals to secure new clients.

What happens if my lender gets purchased by another lender?
This actually happens quite a bit, however, it’s business as usual for you. Even if your mortgage contract gets sold, the terms of your mortgage stay intact and nothing changes for you.

What happens if my lender goes bankrupt or is no longer lending at the end of my term?
This would be the same as if the lender was purchased by another lender. The only difference is, at the end of your term, we would have to find another lender to place your next term. And as this is already good practice, it’s business as usual. Again, you have their money, they don’t have yours. The contract would stay in force.

Why don’t these lenders have physical locations?
Much like why you haven’t heard of these lenders, they save the money on advertising and infrastructure, and instead focus on creating unique products to give their clients more choice. These lenders rely on independent mortgage professionals for awareness and compete on product not public awareness.

Do they really have better products?
Yes. Well, I guess we have to define what is meant by better products. If by better products you mean a variety of products that suit different individuals differently, then yes. Across the board, each lender has a different appetite for a different kind of risk. For example, while one lender might not include child tax income as part of your regular income, another might. While one lender might look favourably on a certain condo development, another might not. Each lender sees things a little differently. Knowing the products and preferences at each lender is what we do!

When it comes to mortgage qualification, some broker channel lenders are more flexible than others (or the banks) and offer different programs that cater to self-employed, people who are retired, own multiple properties, or rely on disability income. While as it relates to the features of the mortgage, different lenders offer many different features.

Some mortgages can be paid off at an accelerated pace with little to no penalty, some accommodate different payment structure, some products are set at lower rate, but sacrifice flexibility.

At the end of the day, the goal should be to qualify for a mortgage that has the features that suit your individual needs. Regardless of which lender that is. If you would like to talk about your financial situation, and see which lender best suits your needs, please don’t hesitate to contact a Dominion Lending Centres mortgage specialist.

MICHAEL HALLETT

Dominion Lending Centres – Accredited Mortgage Professional

2 Nov

THE NEW NORMAL

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

Tis the season… this was no surprise here! The latest round of mortgage guidelines has been announced by OSFI, or Office of the Superintendent of Financial Institutions. As of January 1, 2018, all conventional or uninsured mortgages will have to qualify at the Bank of Canada 5-year fixed rate or the contractual rate + 2%, whatever is greater.
What does this mean? Nothing for anyone wanting to renew or buy real estate with less than 20% down.
But anyone wanting to access their equity might just have to consider a slightly lower amount. And those wanting to purchase real estate with 20%+ down may need to adjust their expectations or relocate their search area.
Regardless of your scenario, there will still be options to exercise.
Next question on many people’s minds is how this will affect prices. Based historical data, I predict that there will be very little decrease in prices. Most people thought the ‘bubble’ was going to explode. Most comments were, “It just has to, how can prices continue to increase?” Well guess what… prices have continued to increase. Some market segments will experience a slight softening, but nothing drastic.
Here is a list of changes issued by OSFI since 2006. Did any of them bring prices down?

2006
Maximum amortization 40 years
100% financing, 0% down payment

2008
Maximum amortization 35 years
Maximum 95% financing, minimum 5% down payment required

2011
Maximum amortization 30 years
Refinance maximum 85% of the market value

2012
Maximum amortization 25 years
Refinance maximum 80% of the market value
If mortgage insurance is required, then the maximum purchase price of the owner-occupied home is $1,000,000

2015
Minimum down payment – 5% of the first $500,000 and 10% on the portion remaining

2016
Qualification rate increases to Bank of Canada benchmark rate for all insurable files (less than 20% down)

2017
Conventional (20% down or greater) stress test increases to contract rate plus 200 basis points (2%) or the Bank of Canada benchmark rate, whatever is greater

2018
What will happen in 2018?

There is no need to slam your fist on the panic button. This is simply the new normal for mortgage finance consumers. The sun will still rise in the east and set in the west. The earth will continue to rotate in a counterclockwise direction. People will still buy and sell real estate. Those consumers with available equity will still have access to it and borrowers will still renew existing mortgages. If you are receiving or buying into “the world is ending” type information, please look away… it’s wrong and misleading.
Nothing changes.
If you are worried about things you cannot control, stop it! If you are going to put any energy into something, I would recommend building a bulletproof personal borrowing profile. More than ever it’s vitally important to have AAA credit, minimal-to-zero consumer debt and strong reliable income and savings. If you start with that, I can assure you everything will be OK!
If you have any plans to become an active mortgage consumer, start looking at your options now as some lenders will adopt the new rules before January 1, 2018. If you have any questions, feel free to contact a Dominion Lending Centres mortgage specialist.

MICHAEL HALLETT

Dominion Lending Centres – Accredited Mortgage Professional

27 Oct

BANK OF CANADA ON SIDELINES, AS EXPECTED

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

BOC Will Raise Rates Only Cautiously

The Bank of Canada held overnight interest rates at 1.0% following two consecutive rate hikes at the July and September meetings. It was widely expected that the Bank would take a breather this round. The central bank also released its quarterly Monetary Policy Report (MPR) today, in which it forecast that growth would be 3.1% this year, 2.1% in 2018 and 1.5% in 2019. The rapid pace of economic growth over the past four quarters surprised the Bank on the high side. Going forward, the Bank forecasts GDP to moderate to a more sustainable pace.

Exports and business investment are expected to contribute to growth over the forecast horizon. In contrast, “housing and consumption are forecast to slow in light of policy changes affecting housing markets and higher interest rates.” The Bank went on to say that “because of high debt levels, household spending is likely more sensitive to interest rates than in the past.” I would go one step further and suggest that higher sensitivity to interest rates is all the more so because of the OSFI stress testing of borrowers at 200 basis points above current contract mortgage rates.

The central bank continues to expect global growth to average roughly 3.5% over the 2017- 2019 period, noting that uncertainty remains high regarding geopolitical developments and fiscal and trade policies. Notably, the renegotiation of NAFTA will have a meaningful impact on the economies of North America, but given the uncertainty, the Bank economists have left this factor out of the base case projection.

Measures of core inflation have edged up as expected, but the Bank now forecasts that inflation will rise to 2% in the second half of 2018, which is a bit later than anticipated in the July MPR reflecting the recent strength in the Canadian dollar.

Business investment contributes to increases in capacity and productivity; hence the Bank of Canada now assumes that annual growth of potential output is 1.5% over 2018-19, which is slightly above the assumption since April 2017. How fast the economy can grow without triggering inflation is a big issue these days. The central bank will publish a full reassessment of this critical point in April 2018. The higher the level of potential growth, the lower the estimated level of the “neutral” nominal policy rate–the level of the overnight rate that is consistent with the Bank’s target of 2% inflation. The Governing Council of the Bank of Canada now estimates the neutral rate to be between 2.5% and 3.5%. The Bank’s economic projection is based on the midpoint of this range– 3.0%. In other words, the Governing Council of the Bank of Canada estimates that it will ultimately raise the policy rate from the current level of 1.0% by 200 basis points to 3.0% once the economy is at full employment. That is a substantial proportional jump in rates, which would undoubtedly slow interest-sensitive spending, and nothing is more interest-sensitive than housing. Which makes you wonder why the financial institutions’ regulator (OSFI) has been so intent on further tightening mortgage credit conditions.

The tone of today’s policy statement was decidedly more dovish–cautious about future rate hikes–than in July and September. Why is that? Firstly, the Bank came under a good deal of criticism for hiking rates more rapidly than expected, reversing the two rate cuts implemented (unexpectedly) in 2016. Secondly, the Bank sees significant risks to the outlook. These risks are delineated in the MPR as follows:
• A shift toward greater protectionist trade policies in the U.S. that weaken Canadian exports
• A more substantial impact of structural factors (Internet, digitization, robots) and prolonged excess supply on inflation (higher potential growth)
• Stronger real GDP growth in the U.S. (owing to prospective deregulation and tax cuts)
• Stronger consumption and rising household debt in Canada
• A pronounced drop in house prices in overheated markets

The Bank of Canada sees the risks to the inflation outlook as balanced–in other words, it is just as likely for inflation to move above forecasted levels as below them. Hence, the Bank will be cautious in raising interest rates in the future and their actions will be data dependent. In their words, “while less monetary policy stimulus will likely be required over time, Governing Council will be cautious in making future adjustments to the policy rate. In particular, the Bank will be guided by incoming data to assess the sensitivity of the economy to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation. “

DR. SHERRY COOPER

Chief Economist, Dominion Lending Centres

23 Oct

NEW MORTGAGE CHANGES DECODED

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

This week, OSFI (Office of the Superintendent of Financial Institutions) announced that effective January 1, 2018 the new Residential Mortgage Underwriting Practices and Procedures (Guidelines B-20) will be applied to all Federally Regulated Lenders. Note that this currently does not apply to Provincially Regulated Lenders (Credit Unions) but it is possible they will abide by and follow these guidelines when they are placed in to effect on January 1, 2018.

The changes to the guidelines are focused on
• the minimum qualifying rate for uninsured mortgages
• expectations around loan-to-value (LTV) frameworks and limits
• restrictions to transactions designed to work around those LTV limits.

What the above means in layman’s terms is the following:

OSFI STRESS TESTING WILL APPLY TO ALL CONVENTIONAL MORTGAGES

The new guidelines will require that all conventional mortgages (those with a down payment higher than 20%) will have to undergo stress testing. Stress testing means that the borrower would have to qualify at the greater of the five-year benchmark rate published by the Bank of Canada (currently at 4.89%) or the contractual mortgage rate +2% (5 year fixed at 3.19% +2%=5.19% qualifying rate).

These changes effectively mean that an uninsured mortgage is now qualified with stricter guidelines than an insured mortgage with less than 20% down payment. The implications of this can be felt by both those purchasing a home and by those who are refinancing their mortgage. Let’s look at what the effect will be for both scenarios:

PURCHASING A NEW HOME
When purchasing a new home with these new guidelines, borrowing power is also restricted. Using the scenario of a dual income family making a combined annual income of $85,000 the borrowing amount would be:

Current Lending Guidelines

Qualifying at a rate of 3.34% with a 25-year amortization and the combined income of $85,000 annually, the couple would be able to purchase a home at $560,000

New lending Guidelines

Qualifying at a rate of 5.34% (contract mortgage rate +2%) with a 25-year amortization and the combined annual income of $85,000 you would be able to purchase a home of $455,000.

OUTCOME: This gives a reduced borrowing amount of $105,000…Again a much lower amount and lessens the borrowing power significantly.

REFINANCING A MORTGAGE

A dual-income family with a combined annual income of $85,000.00. The current value of their home is $700,000. They have a remaining mortgage balance of $415,000 and lenders will refinance to a maximum of 80% LTV.
The maximum amount available is: $560,000 minus the existing mortgage gives you $145, 0000 available in the equity of the home, provided you qualify to borrow it.

Current Lending Requirements
Qualifying at a rate of 3.34 with a 25-year amortization, and a combined annual income of $85,000 you are able to borrow $560,000. If you reduce your existing mortgage of $415,000 this means you could qualify to access the full $145,000 available in the equity of your home.

New Lending Requirements
Qualifying at a rate of 5.34% (contract mortgage rate +2%) with a 25-year amortization, combined with the annual income of $85,000 and you would be able to borrow $455,000. If you reduce your existing mortgage of $415,000 this means that of the $145,000 available in the equity of your home you would only qualify to access $40,000 of it.

OUTCOME: That gives us a reduced borrowing power of $105,000. A significant decrease and one that greatly effects the refinancing of a mortgage.

CHANGES AND RESTRICTIONS TO LOAN TO VALUE FRAMEWORKS (NO MORTGAGE BUNDLING)

Mortgage Bundling is when primary mortgage providers team up with an alternative lender to provide a second loan. Doing this allowed for borrowers to circumvent LTV (loan to value) limits.
Under the new guidelines bundled mortgages will no longer be allowed with federally regulated financial institutions. Bundled mortgages will still be an option, but they will be restricted to brokers finding private lenders to bundle behind the first mortgage with the alternate lender. With the broker now finding the private lender will come increased rates and lender fees.
As an example, we will compare the following:
A dual income family that makes a combined annual income of $85,000 wants to purchase a new home for $560,000. The lender is requiring a LTV of 80% (20% down payment of $112,000.00). The borrowers (our dual income family) only have 10% down payment of $56,000.. This means they will require alternate lending of 10% ($56,000) to meet the LTV of 20%.

Current Lending Guidelines
The alternate lender provides a second mortgage of $56,000 at approximately 4-6% and a lender fee of up to 1.25%.

New Lending Guidelines
A private lender must be used for the second mortgage of $56,000. This lender is going to charge fees up to 12% plus a lenders fee of up to 6%

OUTCOME: The interest rates and lender fees are significantly higher under the new guidelines, making it more expensive for this dual income family.

These changes are significant and they will have different implications for different people. Whether you are refinancing, purchasing or currently have a bundled mortgage, these changes could potentially impact you. We advise that if you do have any questions, concerns or want to know more that you contact a Dominion Lending Centres mortgage specialist. They can advise on the best course of action for your unique situation and can help guide you through this next round of mortgage changes.

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional

18 Oct

CREDIT RATING AND DEBT SERVICING A MORTGAGE

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

It is great feeling buying your first home, but for most of us the first step is preparing to get a mortgage.
Your credit rating and cash flow are based on a minimum of a two-year history.
As mortgage rules continue to change, the credit rating is becoming even more important as a higher credit rating could mean a lower interest rate and save you thousands of dollars over the life of your mortgage.
Your credit is made up of many things that the lenders will look at.

Character, it is determined by:
• Paying your bills on time.
• No Delinquent accounts
• Available credit – Are you using all or most of your available credit? That is not a good thing. You are better off to increase your credit limit than to use more than 70% of your limit each month. If you need to increase your score faster use less than 30% of your credit limit, and if you need to use more, pay your credit cards off early so you do not go above 30% of your credit limit.
• Your total out standing debt is considered.

Capacity: this is your ability to pay back the loan. Capacity also covers cash flow vs debt. Your employment history. How long have you been with your current employer, are you self employed, for how long? Capacity is not what you think you can afford, it is what the lender thinks you can afford based of the debt service ratio.

Capital: how much have you saved? How much do you have for a down payment and where does it come from?

Collateral: Lenders consider the value of the property and other assets as they want to see a positive net worth. If you have a negative net worth you may not be able to get a mortgage.

Not having one of these areas in order could prevent you from getting a mortgage.
Contact you Dominion Lending Centres mortgage specialist for a free review of where you stand.

KEVIN BAY

Dominion Lending Centres – Accredited Mortgage Professional

17 Oct

THE IMPACT OF MORTGAGE RULE CHANGES

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

The mortgage rule changes that were passed by the Ministry of Finance in October 2016 are still having their effect one year later. Higher qualification requirements and new bank capital requirements have split the industry into two segments – those who qualify for mortgage insurance and those who don’t.

Mortgages that qualify for mortgage insurance are basically new purchases for borrows that have less than 20% down and can debt-service at the Bank of Canada Benchmark rate (currently 4.89%). Those who don’t are basically everyone else – people with more than 20% down payment but need to qualify at the lower contract rate, and people who have built up more than 20% equity in their homes and are hoping to refinance to tap into that equity.

The biggest difference we are seeing is two levels of rate offerings. Those that qualify for a mortgage insurance by one of the three insurers in Canada (CMHC, Genworth and Canada Guaranty) are being offered the best rates on the market. Those who don’t qualify cost the banks more to offer mortgages due to the new capital requirements and so are offered a higher rate to off-set that cost.
Dominion Lending Centres’ President, Gary Mauris, wrote a letter to the Prime Minister and the Minister of Finance at the beginning of October 2017 outlining the negative impact of those changes on Canadians on year later. That letter was also published in the Globe and Mail. CLICK HERE to see that letter.

But even more alarming are the rumblings being heard about another round of qualification changes that will see those who have been disciplined in saving or building equity having to qualify at a rate 2.00% higher than what they will actually get from their lender.
Where the first round of changes in 2016 saw affordability cut by about 20% for insured mortgages, this new round of changes will have much the same impact on the rest of mortgage borrowers – regardless of how responsible we’ve proven to be.

The mortgage default rate in Canada is less than 1/3 of a percent. We Canadians simply make our mortgage payments. So where’s the risk?
The new qualification rules are intended to protect us from higher rates when our current terms come to an end. But when most Canadians are already being prudent, borrowing at well below their maximum debt-to-income levels the question now is why do we need to be protected from ourselves?

The latest round of rule changes are rumoured to be coming into effect by the end of October 2017 so my word of advice to at least those who have been contemplating a refinance to meet current goals? Contact your Mortgage Professional at Dominion Lending Centres to find out your options before your window of opportunity is closed.

KRISTIN WOOLARD

Dominion Lending Centres – Accredited Mortgage Professional

19 Apr

THE ROLE OF A MORTGAGE BROKER

Mortgage Broker Industry

Posted by: MANJIT SINGH BHONDHI

The Role of a Mortgage BrokerBuying a home is a big step – a big, very exciting, potentially stressful step! How can you take the hassle out of the equation and keep your buying experience super positive? Easy… Surround yourself with a team of experienced professionals!

Many experienced realtors insist on starting your financing first, that’s where your Mortgage Broker comes in.

What is a Mortgage Broker? A Mortgage Broker is an expert in real estate loans that acts as a match-maker between home buyers looking for money and lenders with funds available to borrow. A broker will collect information from you about your employment, income, assets, loans and other financial obligations as well discuss your current budget, spending patterns and goals in order to get a thorough understanding of where you’re at and where you’d like to be. From here they assess the strengths and any weaknesses in your application and can advise on potential suitable financing options and any next steps you might need to take in preparing yourself for loan approval.

Talking with a Mortgage Broker before you start shopping is helpful for a number of reasons:

  • You’ll develop a well-founded expectation of the price range and payments that you can afford.
  • You’ll have a chance to address any potential gaps in your application for financing BEFORE you’re in a time crunch to meet deadlines for closing.
  • Sellers may take your offer more seriously when you tell them you’ve been pre-approved for your financing putting you in a better position to negotiate (price, possession date, inclusions, other terms, etc).
  • You and your Mortgage Broker will begin to compile your documentation so that your application is ready to go when you find the perfect home, leaving your mind free to start arranging furniture in your new place.

So why use a Mortgage Broker rather than your bank?

A Mortgage Broker has access to loans from a wide range of lenders. That means that you have more potential places to get approved, AND can take advantage of best products, top programs and lowest pricing!

A Mortgage Broker must complete a series of courses and pass the corresponding exams prior to obtaining a license to sell mortgages. In order to maintain that license a Broker must uphold the highest standards of moral, ethical, and professional conduct – including ongoing education and training.

A Mortgage Broker working with multiple lender options means that they truly SHOP for the best programs and rates for you based on comparisons and choices and don’t simply sell you the limited products they have to offer through a single bank source.

Mortgage Brokers work EXCLUSIVELY in mortgages so they are mortgage product specialists rather than banking generalists. Brokers deal with real estate transactions involving deadlines and conditions everyday as part of their job. They understand the urgency of meeting these commitments to ensure a successful transaction for everyone involved.

Learn more by contacting your Dominion Lending Centres mortgage professional today!

Mandy Reinhardt

MANDY REINHARDT

Dominion Lending Centres – Accredited Mortgage Professional