We are feeling the January 1st Mortgage Rule Changes

We are feeling the January 1st Mortgage Rule Changes

Late 2017, the government announced that they would be enforcing stricter mortgage rules across the board for Canadians. Until this time, only borrowers with less than 20% down were subject to this tighter qualification process. The new rule goes as such: All borrowers with less than 20% down (insured or insurable deals) must qualify at a rate of 5.14% over a maximum of 25 years. All borrowers with greater than 20% down, must qualify at the greater of the 5.14% or 2% higher than the contract rate (or more simply, the mortgage rate they are offered). The result of these stricter rules? Borrowers are qualifying for almost 20% less of a mortgage they would have prior to January 1, 2018. Having now pushed through the first quarter of 2018, we are noticing the impact these rule changes are having on potential borrowers. If you are thinking about purchasing or refinancing this year, or, if you have a mortgage coming to its maturity, be sure to reach out now to discuss your options....
8 Things to Avoid After a Mortgage Preapproval

8 Things to Avoid After a Mortgage Preapproval

You have word from your agent letting you know you are pre-approved for a mortgage. This is an exciting time as you are well on your way to purchasing a new home. A preapproval is usually good for 60 to 120 days depending on the lender. If you do not purchase a home within this time frame, the lender may require you to get preapproved again. Therefore, it is important to continue the great behavior that got you the preapproval, in the first place. Below are eight tips to help keep your financial situation preapproval ready. 1. Don’t apply for new credit Some lenders require the mortgage broker to do another credit check before they give final approval. If the credit check reveals new credit inquiries, they may want you to verify that you have not taken on any new debt which will delay the approval. Taking on any new debt can impact your credit score, so it is best not to take the risk. 2. Don’t make any major purchases If your credit report does get pulled again and it shows you are carrying a balance from making some large purchases, this may affect your approval status. Buying furniture, appliances or renovation material is fine if you have extra cash but putting it on your credit card will increase your debt-servicing ratio which is one of the guidelines used for qualifying a mortgage. This can reduce the loan amount and put your home you made an offer on, out of your price range. 3. Don’t pay off your debt Paying off debt is usually a good idea, but...
Qualifying for a Mortgage Just Got Tighter

Qualifying for a Mortgage Just Got Tighter

Yesterday, Finance Minister, Bill Morneau, announced new rules that serve as another attempt to slow the housing market. At this point it has only addressed buyers looking to purchase with less than a 20% down payment. Here are the details: As of October 17th, all mortgages, regardless of the term, will need to be qualified at 4.64%. This is called the benchmark rate. The government essentially is only allowing lending up to what a client can afford if rates were at 4.64%, even if their interest rate is much lower. 1-4 year terms, and variable rate terms have always qualified at the benchmark rate, but now the 5 year term that most buyers would take with less than 20% down is facing the same scrutiny. Important to Know: Clients who already have accepted offers with a firm mortgage approval prior to Oct 17th are exempt from this new qualifying rate, as long as the completion date is prior to March 1, 2017. They will still have to pay the insurance premiums and they have not changed. A maximum amortization of 25 years still remains in effect. Action to Take: If you have an accepted offer on a home, make sure you have a mortgage approval prior to Oct 17th. If you are in the market and shopping, try to get your offer accepted in the next few days in order to qualify as per current guidelines. If you are shopping and likely won’t have an accepted offer by Oct 17th,  call your mortgage broker to find out what you qualify for based on the new...
Barrie Home Sales at a Record High in March 2016

Barrie Home Sales at a Record High in March 2016

Barrie, Ontario is breaking records when it comes to home sales both by unit and price. Barrie and are residential property sales recorded 553 units in March 2016- the highest March sales recorded to date, and a 22.6 per cent from March 2015. The second highest sales for March occurred back in 2010, when 468 units were sold. A few more stats:   The year-to-date average price figure for homes sold within the City of Barrie in 2016 was $379,227. This figure is up 17.2 per cent compared to the first quarter of 2015. The year-to-date average price figure for the surrounding areas in 2016 was $430,407. This figure is up 11.8 per cent compared to the first quarter of 2015. The overall supply of homes available for sale is currently trending near the lowest levels on record. Active residential listings on MLS was at 921 units at the end of March 2016, down 25.4 per cent from last year. Mortgage interest rates have dropped below 2.50% for a 5 year fixed in the last couple of weeks which is the lowest we’ve seen. If you’ve been wanting to do some home renovations, or pay off some higher interest debts (car loans, credit cards, lines of credit, etc.) Talk to one of us about a refinance and take advantage of the low rates and equity in your home.   Home sales information from the Canadian Real Estate...
Purchasing a Home over $500,000? 5% Down Doesn’t Cut it Anymore

Purchasing a Home over $500,000? 5% Down Doesn’t Cut it Anymore

Starting February 15, 2016, homes purchased for greater than $500,000 will require a little more down payment than the current 5% requirement. Under the new rules, 10% down is required on the purchase amount in excess of $500,000, while you would still only be required to have 5% down on the first $500,000. For example, under the current rules, if you were purchasing a home for $650,000, you would have to put a minimum of 5% down ($32,500). Under the new rules, on the same house you would have to put a minimum of 5% down on the first $500,000 ($25,000) plus 10% down on the remaining $150,000, ($15,000) for a total down payment of $40,000. The thought process behind this change in policy is to ensure that those purchasing homes over $500,000 have ample equity in their homes to protect themselves in a market where house prices are somewhat...