New qualifying federal mortgage rules changes

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New qualifying mortgage rulesNew qualifying federal mortgage rules changes

On October 3rd, Bill Morneau, Minister of Finance announced “Preventative measures for healthy, competitive and stable housing market”. The intention is to address the growing household debt and rapidly rising house prices.

Learn about the new qualifying federal mortgage rules changes that will affect your mortgage affordability during the qualification process and what can you do to qualify for that mortgage that you are seeking

The new rules affect the CMHC insured and Low Ratio Bulk Insured Mortgages.

These new rules might definitely affect the housing market as intended, affecting also a through the qualification process a great number of borrowers with intentions to purchase a home or to renew their current mortgage.

How are these changes affecting you as a borrower and most important what can you do right now to avoid negatively affected?

The following links explain both affected types of mortgages Select the type of mortgage that you would need to purchase of to refinance your current.

What kind of mortgage do you need information about?

For new home buyers, new mortgage rules select according to the amount of your downpayment. Under 20% down payment = high ratio mortgage. Over 20% down payment = low ratio mortgage

New rules high ratio mortgageHigh ratio (less than 20% of downpayment) home purchase or refinance
New rule low ratioLow ratio (more than 20% of downpayment) home purchase or refinance

You can also apply on line now or Call or text 416-262-7139 and request a confidential one on one meeting to look at specific answers and help you get the best mortgage deal.

Call or text 416-262-7139
Contact meApply On Line

New rules affecting low ratio mortgages

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New rules low ratio mortgageNew rules affecting low ratio mortgages

The new rules affecting low ratio mortgages or mortgages backed by portfolio insurance are effective from November 30th, 2016.

The following are new mortgage rules for low ratio mortgages, (Over 20% down payment = low ratio mortgage)

The new refinancing rules have been postponed to start taking effect on May 1, 2017,

New eligibility requirements for low-ratio mortgages to be insured will include:

  • A loan whose purpose includes the purchase of a property or subsequent
    renewal of such a loan;
  • A maximum amortization length of 25 years;
  • A maximum property purchase price below $1,000,000 at the time the loan
    is approved;
  • For variable-rate loans that allow fluctuations in the amortization period,
    loan payments that are recalculated at least once every five years to
    conform to the original amortization schedule;
  • A minimum credit score of 600 at the time the loan is approved;
  • A maximum Gross Debt Service ratio of 39% and a maximum Total
    Debt Service ratio of 44% at the time the loan is approved,
    calculated by applying the greater of the mortgage contract rate or the Bank
    of Canada conventional five-year fixed posted rate; and,
  •  A property that will be owner-occupied.

A benchmark test rate will be applied to qualify.

Scenario:

A $500,000.00 mortgage at an annual benchmark rate of 4.64% (This is a test rate) on a 25 years amortization will require a monthly payment of $2,806.41

A $500,000.00 mortgage at an annual contracted rate of 2.39% on a 25 years amortization will require a monthly payment of $2,212.53. (This would be the real payments)

What should you do at this moment?

There is no one single financial move as each borrower has different needs and different circumstances,  however with you should apply on line now or call or text 416-262-7139and request a confidential one on one meeting to look at specific answers and help you get the best mortgage deal. Delays to take action may cost you! Don’t delay!

Call or text 416-262-7139
Contact meApply On Line

New rules affecting high ratio mortgages

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New mortgage rules high ratioNew rules affecting high ratio mortgages

The new rules affecting high ratio mortgages are effective from October 17th, 2016.

The following are new mortgage rules for high ratio mortgages, (under 20% down payment = high ratio mortgage).

From October 17th, 2016 onwards all borrowers (including those seeking a mortgage with a 5 year or longer fixed rate, insured mortgage with a variable rate, fixed under 5 years term) will need to qualify at the benchmark rate set by the Bank of Canada (currently at 4.64%) even if the mortgage loan will carry a lower mortgage rate. The monthly payments will consider the agreed rate (not the 4.64% benchmark rate)

Scenario:

A $500,000.00 mortgage at an annual benchmark rate of 4.64% (This is a test rate) on a 25 years amortization will require a monthly payment of $2,806.41

A $500,000.00 mortgage at an annual contracted rate of 2.39% on a 25 years amortization will require a monthly payment of $2,212.53. (This would be the real payments)

Simply put: Well qualifying borrowers that before the new rules were able to qualify for a certain amount mortgage, will qualify for a lesser amount mortgage after October 17th, 2016 when the new rules take effect.

The periodic payments maybe the same amount as they are factoring the loan amount, the contracted mortgage rate and the amortization period, once the mortgage is approved.

What can you as a borrower interested in a mortgage do now?

  • Increase considerably your down-payment.
  • Increase your qualifying income.
  • Look for an alternative property.
  • Try to keep your debt low and your credit high.

As of October 17, 2016, all insured mortgages regardless of the term must be qualified at the Bank of Canada Benchmark rule (currently at 4.64%)

What should you do at this moment?

There is no one single financial move as each borrower has different needs and different circumstances,  however with you should apply on line now, call or text 416-262-7139and request a confidential one on one meeting to look at specific answers and help you get the best mortgage deal. Delays to take action may cost you! Don’t delay!

The new refinancing rules have been postponed to start taking effect on May 1, 2017,

Do you have questions or need assistance with your mortgage?

Call or text 416-262-7139
Contact meApply On Line

 

Mortgage for single parents

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Mortgage for single parents

Child Support incomeIn Ontario, as of 2011 according to Stats Canada, there were more than 604,000 lone-parent families, and in a staggering 80% of them, the female parent was living with their children!.

Now, this days is very difficult enough for a married or common-law couple to qualify for a mortgage in order to become a home owner, that difficulty is significantly greater for the single parent.

The distress of the single parents enhances their vulnerability against debt and for many their incapacity to understand that they too should be able to afford home ownership, even if they are separated from their spouse or partner

Mortgage for single parents, however, is possible when the qualifications are available, to help with the income, when applying for a mortgage, a single parent should include the following sources of income on top of the regular salary or earnings as a self-employed

Some of our mortgage lenders offer very helpful mortgage products where other proven income rather than the traditional are accepted, ask for details

May I help you with your mortgage?

Mortgage insurers support single parents in their endeavor of home ownership by allowing that their proven child support or alimony is accepted as part of their qualifying income when they meet the following criterias that need to be collected by the mortgage agent in order to present to the mortgage lender:

  • Court ordered or an executed separation agreement (lender must obtain)
  • No more than 50% should be used for qualification purposes
  • 100% may be used provided income represents <30% of gross income and borrower has demonstrated receipt – through T1 General – for a minimum of 1 year.

It is common that many single parents do not know how much is the child support that they should receive for each child, to help with an estimate, here below you can find a table with some income amounts that could help them get an idea of what they should receive as child support in Ontario

Under the Federal Child Support Guidelines, the table amount is determined by:

  • The number of children;
  • The province or territory where the paying parent lives; and
  • The paying parent’s before-tax annual income.

Annual gross income# of Children Monthly child support
$80,0002$1,172.00
$50,0001$450
$55,0001$498.00
$60,0001$546.00
$65,0001$594.00
$70,0001$639.00
$75,0001$682.00
$80,0001$724.00
Annual gross income# of Children Monthly child support
$50,0002$743.00
$55,0002$817.00
$60,0002$892.00
$65,0002$966.00
$70,0002$1,037.00
$75,0002$1,105.00

Table Look-up Disclaimer

The Child Support Table Lookup has general information only. It is not a legal document. The tables were last updated December 31, 2011. To determine how much child support is owed from May 1, 2006, to December 31, 2011, use the 2006 tables. Note that provincial or territorial guidelines may apply in some cases.

Contact me if you need more information for your mortgage.

Contact your mortgage agent

A refinance story

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A refinance story

Hawaii calm beach

Hawaii calm beach

After a period of some stressful time in their life, this including hard work, a change of workplace, some family illnesses and some accumulation in the credit card usage , a client called me asking for some financial advise. Their goal was to recuperate their financial stability, to stop accumulating debt with high interest rates that were consuming a great deal of their fixed income and mainly to get a piece of mind to continue.

We had a chat a coffee shop and before my medium size of black coffee was finished we were filling up their online mortgage application, I simply learned what they wanted and their particulars, the rest was just a matter of simple paper work that we both worked together on.

Can I help you refinancing?

After a few days they were able to reduce considerably their high cost of borrowing and by the first month they were able to feel the financial difference, that was in the very short time, on top of that a projection of their future debt accumulation showed them a great difference in the overall reduction of their debt. Freeing cash using the equity in their home without losing nor risking any future home resale value was the triggering tool that gave them a piece of mind.

After the second month they were able to travel to Hawaii to realize a long due trip they had promised to each other to enjoy.

Today their mortgage payments are low and their debt is on the decline

As a token of thank you they shared the following pictures taken from their hotel room balcony, a time they enjoyed and will remember in their lifetime.

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Canadians’ household debt

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High Canadian debtSimply put in regards to Canadians household debt; In average we currently owe 162.6 per cent of every disposable dollar, that means from every dollar after available after taxes and mandatory charges. This has been attribute in part to record low interest rates that may have been seeing as an invitation to get into debt by many Canadians, all with the hopes that our so far stable and inclined to growth stable economy will allow us to re-pay our not so expensive debt in the near future.

But how are the record low mortgage rates being appreciated by those who are still renting? Are more families becoming home owners as a result of this attractive rates?

Have questions?

A perhaps right or perhaps wrong (you can comment bellow) answer to the first question could be that most of renters have not yet have enough time to seize the opportunity as the debts have make their mark in their credit score limiting their ability to qualify as that of saving enough for the down payment for a home that keeps a steady rise in price.

Having said the above, the answer to the second questions is: More yes, but very few and not enough to move the economy at a faster pace. But getting more renters to become home buyers does not change on mortgage rates factor alone, a factor that is very important to consider is the proper knowledge that the renter has of the many options at his/her reach to capitalize the opportunity and finally become a home owner.

ContactMany are still hesitant to make the decision to place a call ad have his mortgage assessment done even when this is at no cost, so that they could know where they really financially stand and what are the range of opportunities for them to seize and finally turn into a home owner before the rates start climbing as a result of a recuperating economy south of the border that might attract our current investors in Canada’s lending industry leaving us with a more expensive cost of borrowing some time this year or next.

A simple yet resolute advice to renters is have your mortgage assessment done now free of charge and make a move into buying a house or not, after knowing that result and hearing the given advise

 

 

Mortgage Videos

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Household credit growth in Canada

Household credit growth in Canada

The information on the following graph helps us observe that from the past 7 year approximately borrowers are paying more importance to their secure mortgage credit rather than easy to obtain commercial credit like credit cards; Thanks in part to the federal government regulations and on to the slow economic activity that has affected many industries and borrowers in all economic sectors

Borrowers have learned to use the strategies offered by mortgage agents all around Canada; mortgage strategies like mortgage refinances, debt consolidationlines of credit and first mortgages, wisely negotiated by mortgage agents at the lowest mortgage rates.

Your personal observation on the matter in important to gain a broad perspective on how mortgage loans may be affecting you; Write a line at the bottom o this post!

Household credit in Canada

Decreasing bond value pushes to higher mortgage rates

Decreasing bond value pushes to higher mortgage rates

Financially speaking, a bond is a debt instrument that based on a current rate pays interests with certain periodicity and investors attracted to profit from those bonds may see their principal invested upon maturity of the bond.
Since the mortgage rates having remarkably low due to a slow pace economy, the profit of the bonds do not seem to be as attractive as before, therefore the price of the bonds for future debts seems to be lowering.
To make the price of the bonds more attractive, there is a need in the market for an increase on the mortgage rates to avoid investors looking for different industries or markets where to invest in search for a higher return.
In short: Mortgage rates may see an increase in the current year.
Advice: Lock your mortgage rates now or soon, however do not fall into the innocent category where you only pay attention to the rate, as a mortgage may be more convenient when including other terms like being portable or assumable.
If you need to switch from your current lender, that may not be a problem as some of our lenders offer free switch and transfers helping to pay the penalties originated by the early switch or transfers in order to save the costs to the borrower and win their business
Feel free to contact me for more information
Contact your mortgage agent

First mortgage

First MortgageFirst mortgage is the first loan registered on the real estate title.

Looking to buy your first home?

Save thousands on your first mortgage, know your options & get approved

Other mortgage loans can also be registered on the same property title, they would be called second or third mortgages

Reading the following will help you get approved when applying for your first mortgage

You are excited about buying your home and wouldn’t like disappointments, if this is the case read the following:

  • Is smart to have your mortgage assessment practiced before you start viewing homes, that way you’ll know what you can or can’t afford.
  • Learn about the unique advantages you are entitled to if you are a first time home buyer
  • Learn about your credit and mortgage loans and credit score
Call or text 416-262-7139
Contact meApply On Line