Quick, what’s the first thing that comes to mind when you think of “second mortgages”? For some it could be that shady-looking character in a smoke-filled pool hall… guys with gold chains and a baseball bat nearby. Maybe you’re thinking of someone in financial trouble? Or, perhaps it’s just someone who doesn’t want to pay outrageous costs and penalties to refinance their existing mortgage.
The mere mention of second mortgages conjures up all sort of images. Most of them, negative. For many, a second mortgage can be a last-resort solution during a financial crisis. For several others, it can be an opportunity to save money. That’s right, to save money.
Sure, second mortgages carry a higher interest rate than first mortgages, but they can also serve a purpose. One of those purposes can be to save you money. Yup, I said it again. There are some new trends emerging with today’s new mortgage products that are forcing consumers to seek other options. Two of these trends are INFLATED PREPAYMENT PENALTIES and NO FRILLS MORTGAGES! Continue reading “Considering a Second Mortgage? It can save you money!”
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?”
Next Wednesday will be the first Bank of Canada meeting date to set the Target rate, which directly affects Bank Prime rate and Variable rate mortgages. It’s almost a certainty that the Bank of Canada Governor, Stephen Poloz, will raise the rates.
POSITIVE DATA MEANS HIGHER RATES
There’s been too much positive economic data lately. Low unemployment levels (5.7%, the lowest since the ’70s), higher spending by consumers, slightly higher inflation (2.1%), record level stock market. We’ve also seen some comments and posturing by the Bank of Canada Govr that suggests we should expect a 0.25% increase.
Bond yields have also been moving steadily upward. Yup, we should expect a rate hike. And depending on how the market reacts to this, we could possibly see another rate hike at the next Bank of Canada meeting on March 7th.
BUT WAIT, IS THIS THE END OF MORTGAGE RATES IN THE 3.00%’s?
Continue reading “Rates are going up… for now… is this the end of low rates?”
TIME IS ALMOST UP..
With just days to go before the new mortgage rules take effect on January 1st, we are seeing a flurry of mortgage applications. Panic buying and refinancing is at its peak. And rightfully so.. next year, you will qualify for at least 15% less mortgage.
(TIP… get a preapproval before Dec 31st and it will remain valid for 120 days from the date of preapproval. You do not have to enter into a purchase agreement before Dec 31st. And if refinancing, you don’t have to close prior to Dec 31st. This is not with all banks. Call my office for more info.)
LET’S BEAT UP ON THE SELF-EMPLOYED SOME MORE Continue reading “Last call for mortgage approvals under the current rules….and an in-depth look at how these new rules will impact YOU in 2018.”
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..”