Client: “What is your rate?”
Client: “What is your rate?”
There has been regulatory changes announced by the Office of Superintendent of Financial Institutions (OSFI) and they will be implemented for January 1, 2018.
The changes will drastically decrease how much a borrower qualifies for on a refinance or a purchase with 20% down payment or more. See the 3 changes outlined below and contact me with any questions!
I recently wanted to share with my buyers how smart they were by contacting me and getting a pre-approval and rate hold done. They have been requesting to extend the rate hold for the last 8-9 months as they looked for a home and went into several multiple offer situations, and unfortunately took a few times before they got an accepted offer. We worked together with the changing rate environment throughout the year, and now they are soon to be home owners! We looked at the current interest rates versus their pre-approval rate hold.
The rates recently went up, and they are savings over $7500 in interest alone during their 5 year term! And the principle of their mortgage will be $2619 lower than it would have been with current rates!
Be sure to work with a mortgage broker that will work with you even before you have an accepted offer! This is the time it counts as you never know when rates will spike!
The variable rate mortgage prime rate went up by 0.25% at banks across the country after the Bank of Canada (BoC) announced they are increasing their interest rate by 0.25% yesterday.
DLC’s chief economist, Dr. Sherry Cooper, states how the Canadian economy is on a tear, dramatically outperforming the U.S. The BoC is concerned with increasing household debts and welcomes a slowdown in housing in borrowing activity.
October 25th is the next interest rate announcement by the BoC.
Have you been approved for a mortgage and waiting for the completion date to come? Well, it is not smooth sailing until AFTER the solicitor has registered the new mortgage. Be sure to avoid these 10 things below or your approval status can risk being reversed!
1. Don’t change employers or job positions
Any career changes can affect qualifying for a mortgage. Banks like to see a long tenure with your employer as it shows stability. When applying for a mortgage, it is not the time to become self employed!
2. Don’t apply for any other loans
This will drastically affect how much you qualify for and also jeopardize your credit rating. Save the new car shopping until after your mortgage funds.
3. Don’t decide to furnish your new home or renovations on credit before the completion date of your mortgage
This, as well, will affect how much you qualify for. Even if you are already approved for a mortgage, a bank or mortgage insurance company can, and in many cases do, run a new credit report before completion to confirm your financial status and debts have not changed.
4. Do not go over limit or miss any re-payments on your credit cards or line of credits
This will affect your credit score, and the bank will be concerned with the ability to be responsible with credit. Showing the ability to be responsible with credit and re-payment is critical for a mortgage approval
5. Don’t deposit “mattress” money into your bank account
Banks require a three-month history of all down payment being used when purchasing a property. Any deposits outside of your employment or pension income, will need to be verified with a paper trail. If you sell a vehicle, keep a bill of sale, if you receive an income tax credit, you will be expected to provide the proof. Any unexplained deposits into your banking will be questioned.
6. Don’t co-sign for someone else’s loan
Although you may want to do someone else a favour, this debt will be 100% your responsibility when you go to apply for a mortgage. Even as a co-signor you are just as a responsible for the loan, and since it shows up on your credit report, it is a liability on your application, and therefore lowering your qualifying amount.
7. Don’t try to beef up your application, tell it how it is!
Be honest on your mortgage application, your mortgage broker is trying to assist you so it is critical the information is accurate. Income details, properties owned, debts, assets and your financial past. IF you have been through a foreclosure, bankruptcy, consumer proposal, please disclose this info right away.
8. Don’t close out existing credit cards
Although this sounds like something a bank would favour, an application with less debt available to use, however credit scores actually increase the longer a card is open and in good standing. If you lower the level of your available credit, your debt to credit ratio could increase and lowering the credit score. Having the unused available credit, and cards open for a long duration with good re-payment is GOOD!
9. Don’t Marry someone with poor credit (or at lease be prepared for the consequences that may come from it)
So you’re getting married, have you had the financial talk yet? Your partner’s credit can affect your ability to get approved for a mortgage. If there are unexpected financial history issues with your partner’s credit, make sure to have a discussion with your mortgage broker before you start shopping for a new home.
10. Don’t forget to get a pre-approval!
With all the changes in mortgage qualifying, assuming you would be approved is a HUGE mistake. There could also be unknown changes to your credit report, mortgage product or rate changes, all which influence how much you qualify for. Thinking a pre-approval from several months ago or longer is valid now, would also be a mistake. Most banks allow a pre-approval to be valid for 4 months, be sure to communicate with your mortgage broker if you need an extension on a pre-approval.
Determine the Best Mortgage, for YOU!
1. Understand Your Expenses
do you have a budget?
2.Knowing Your Job Stability
– is your position in-demand? What is your long term employment/career goals?
3.Consider Your Limits
– what type of rate and amortization is best?
4. Know what you want in your home!
-Location, size, special features, lifestyle
Make sure you talk topics over with your mortgage broker to help find the right mortgage product for YOU!
See this article by a DLC professional for more details!
When going over mortgage options with my clients, I always discuss banks, credit unions and monolines aka “broker lender” financial institutions.
Do you know which of the three:
Please ask me if you need clarification!
Here is a great article to see just some differences:
Well this isn’t a surprise to any of us on the consuming end of banks!
We know they have been increasing limits, changing our banking fees etc without consent! I’m so so happy that an audit will be happening on “the big 5”. I work directly with the “big banks” on a daily basis, and in my line of work, I see unauthorized mortgage approvals that jeopardize my clients buying process. I hear a TON of stories about banks making changes with NO consent or the client’s knowledge of what has happened.
Employees have admitted to giving poor financial advice so the branch will earn more money!
Lets hope the audit puts less pressure on bank employees and more protection for the consumer!
“That was easy” – BC’s Premiere Christy Clark. Love the humour from our Liberal Majority government after the underdogs won!
“Strong Economy, Secure Tomorrow”, the underlying message of our Liberals platform, can’t wait to see what they have in store for us! Looking forward to more job and economy growth for the province of BC!
Is your mortgage a Collateral charge? Do you know what having a collateral charge mortgage means? The “pros” and cons? An undercover CBC reporter went into a TD branch to ask about their mortgages, the reporter had to ask 4 different ways before the TD rep finally admitted their mortgages are collateral. And they do not disclose this until the borrower is at the lawyer signing!!!
There are many drawbacks of having a collateral mortgage. Please read this article to educate yourself on collateral mortgages, and ask me if you have any questions!