CategoryMortgage Tips

Posted February 20, 20188 Comments Debt

Reverse Mortgages growing in popularity… Product of the year 2018?

Mortgage stress test is the buzz phrase in mortgage lending for 2018. Every borrower, regardless of how much down payment you’re making, must pass a stress test to qualify for a mortgage. The math is simple, yet intimidating. Lenders must now use your mortgage contract rate PLUS 2.00% to qualify you.

Yes, that’s correct. You need to qualify at a rate that’s 2.00% higher than your actual rate. And it doesn’t matter if you have 35%, 40%, 50%, 60% or even 70% down payment. That will not have any impact on your approval. It’s all about how much income you can prove you earn and the strength of your credit worthiness.

For many, this new rule will prevent them from qualifying for a mortgage. And for seniors or people approaching retirement who still require a small mortgage to get through the next 10 or 20 years, these new mortgage rules are a killer. The stress test is surely causing stress among many Canadians!

I’M RETIRING AND WANT TO STAY IN MY HOME…

A reverse mortgage is a terrific option for homeowners who are at least 55 years old. It empowers them to be able to stay in their home and access tax-free equity without having to make regular payments.

Continue reading “Reverse Mortgages growing in popularity… Product of the year 2018?”

Posted February 13, 20183 Comments Interest rates

Rent is up, vacancy is down… rental properties make sense

Rental properties are a secure long-term investment. Note the emphasis on “long-term”.

Check out any seven-year period over the past 50 years (anyone who has read this news site knows that I always recommend buying and holding for at least seven years). Property values have almost always risen.

Sure, the last five or 10 years have seen fantastic appreciation in almost every part of Canada. But, let’s leave capital appreciation out of the equation for now.

Why aren’t we talking about rental income? Or, how about the equity growth through your mortgage being paid down each year?

RENTAL INCOME IS UP, UP, UP!

Rents have definitely gone up with inflation (or even higher, in many cases, as we have seen in urban markets like Toronto and Vancouver). This is part of what makes rental properties attractive – rent rises with inflation and, in many cases, even higher. This is how you create your own pension or retirement income! Continue reading “Rent is up, vacancy is down… rental properties make sense”

Posted February 2, 20181 Comment Money saving tips

Why I started this site… 400+ articles later

I’m often asked why I started this site. It’s simple: I was tired of reading misinformation and twisted truths about mortgage brokering in Canada.

Back in 2009 when I created the site, there were some new blogs reporting on mortgage trends and offering ‘expert’ advice. (I use the term ‘expert’ loosely.) In reality, these sites were full of misinformation. The information was even damaging to the mortgage brokering landscape, in many cases… yet, they were being quoted by our largest newspapers and TV news channels. Wow! How can the major newspapers print this stuff?? It made me angry.

At the same time, there were rate shopping sites being launched. You know the ones… they compare bank, credit union and mortgage broker rates. These sites promised to compare rates, with no strings attached and tell you which provider has the lowest rate. They were supposed to be totally unbiased. They were supposed to be market neutral. Hey, don’t get me wrong, everyone loves to compare, shop and save, right? Comparing is part of being a smart consumer… but there is this huge problem… These sites are NOT unbiased or neutral. These sites are NOT run or owned by independent people.

You would expect a product review site to be neutral and unbiased, right? I mean, it just makes sense. If I want to compare hotels or vacation destinations, I’ll go to a site like TripAdvisor or Booking.com. We can clearly view the best available price and past customer experiences. We wouldn’t expect TripAdvisor or Booking.com to own the hotels or airlines they were advertising. That would be a conflict of interest.

Continue reading “Why I started this site… 400+ articles later”

Posted December 18, 2017 Mortgage News

OSFI’s new mortgages rules… a silver lining..

SEARCHING FOR THE POSITIVE..YES, THERE IS SOME.

Hard to find any positive news from OSFI’s (Office of the Superintendent of Financial Institutions) new mortgage rules announced last week.

In case you missed it.. It just became harder to qualify for a mortgage. I’m talking about those with more than 20% down payment. Harder than it’s ever been in my 28 yr career. Harder than I think we’ve ever seen in history.

The old rule of mortgage lending was that if you had a large down down payment of 35% or more, and you had good credit, quality real estate, then you were approved. You were guaranteed to get a great mortgage. And rightfully so. You earned that right. You built up significant equity. And the chances of someone defaulting on that mortgage was very slim.

No reason to ask borrowers a long list of questions about their historical earnings, 3 years of income tax returns, Notice of Assessments, blood tests and other bodily fluids (okay, they aren’t asking for bodily fluids or blood.. but it sure feels that way.). Beginning January 1st, 2018, that logic is gone. Banks will have to put you through the toughest mortgage qualifying process that you’ve ever seen.

I’m not the smartest person, but someone has to explain to me why it should be tougher for someone with more than 20% down, even 50% or 70% down payment, to qualify for a mortgage than someone with 5% down? This makes no sense. And there is no logical reason to do this. Discouraging home ownership or real estate ownership is wrong.

THE SILVER LINING

Here’s that silver lining I was talking about.. Continue reading “OSFI’s new mortgages rules… a silver lining..”

Posted October 30, 20174 Comments Consumer Debt

Review your mortgage NOW! Next year may be too late.

It’s begun. The message is starting to sink in. The new mortgage rules could eliminate 15% of Canadians from qualifying for a mortgage after January 1st, 2018. The mad rush has started as mortgage inquiries are up significantly.

WHO WILL BE AFFECTED?

Anyone that has a mortgage renewal in next 12 to 20 months.
Anyone thinking of buying in the next 12 months.
Anyone that is needs or is thinking of refinancing their mortgage in the next 12 months.
Rental property owners. Yes, you too.
Future retirees with lots of home equity (newsflash..the new rules don’t take into consideration how much equity you have in your home.. your net worth is also irrelevant… it’s all about how much income you earn and declare…)

All of these borrowers will be affected. If you’re not getting the message, anyone with a mortgage should be getting a review done NOW. Don’t wait until next year. You may not qualify for a mortgage.

EXPECT HOME SALES TO SPIKE UP TEMPORARILY Continue reading “Review your mortgage NOW! Next year may be too late.”