Are The New Mortgage Rules Going To Effect Your Buying Power
In the good old days it was relatively easier to apply for a mortgage; but, with the every changing New Mortgage Rules things are more complicated and confusing. New mortgage rules will effect how we as the consumer purchase realest going forward. After home prices in certain areas increased by above-average rates over the last few years this led to worries that mortgage borrowers could not afford higher payments if interest rates were to increase in the near future. Hence the introduction of the New Mortgage Rules and “Stress Tests”.
In October 2016 The Federal Office of the Superintendent of Financial Institutions (OSFI) introduced new more restrictive mortgage qualification “Stress Test” rules for insured (aka “High Ratio”) mortgages where the down-payment is less than 20% of the home purchase price in order to stabilize home prices and maintain home affordability. This change made it more difficult for first-time home buyers and people with low incomes to qualify for a mortgage.
To even the playing field OFSI announced that the mortgage qualification “Stress Test” would apply to all mortgage borrowers so that it will be more difficult for “Conventional” borrowers to qualify for an uninsured mortgage starting January 1, 2018.
The new mortgage rules or mortgage qualification “Stress Test” forces borrowers to qualify at the Bank of Canada “Benchmark Rate” (4.99% as of Nov. 1, 2017) or the actual 5-year contract rate plus 2%, whichever is higher.
The consequence of the mortgage qualification “Stress Test” is that it lowers the limit on the mortgage amount, which in turn limits the home affordability price and lowers the amount that can be refinanced on existing mortgages for renovations and/or debt consolidation.
As an independent Mortgage Agent I can help you simplify the time consuming, complex and confusing mortgage application process and reduce the stress over the mortgage qualification “Stress Test” by calculating your mortgage limit based on your income and debt ratios. I can help you understand the New Mortgage Rules, you can also http://mailchi.mp/firstnational/b-20-update-from-first-national?e=eb628e0ad1&utm_source=Residential+-+Broker+List+%5BENGLISH%5D&utm_campaign=8ccba0fda2-EMAIL_CAMPAIGN_2017_12_20&utm_medium=email&utm_term=0_3a54a891f4-8ccba0fda2-133176965
New Mortgage Rules Stressing You Out? Simplifying the mortgage qualification process
Just like four strong legs are necessary to support a table, from the perspective of the mortgage borrower a successful mortgage application depends on four strong elements — credit history, employment income, deposit (equity) and property details.
The following list summarizes the most common factors that affect the interest rate offered by the mortgage lender:
•Type of mortgage
(i.e. Insured Purchase/Switch/Transfer, Uninsured Purchase, Uninsurable Refinance)
• Type of Property — Owner Occupied, Investment / Rental Purchase
• Fixed or variable interest rate?
• Mortgage Term
• Mortgage repayment period (i.e. Amortization)
• Borrower’s credit score
• Loan to value ratio
• Type of early redemption charge
• Mortgage flexibility options
Mortgage financing decisions can be difficult, confusing & complex. Emotion and psychology can play a big part in the financing of a home purchase, renovation or refinancing and the mortgage borrowing process. As a Mortgage Agent my job is to arrange a mutually beneficial relationship between mortgage lenders and borrowers.
As an independent Mortgage Agent I am not restricted to one lender. Last year Excel Mortgage Canada Connection dealt with many different lenders. So, if you need help with your mortgage financing needs I have the solutions to simplify the mortgage application process and give you peace of mind!
Easy ways to keep more money
in your pocket
It goes without saying that most of us would appreciate a little more money in our pockets. Believe it or not, it’s actually an achievable goal. In fact, a few simple tips can help you uncover meaningful savings each and every month. Need some ideas? Here’s a little inspiration to get you started:
1. Pack food from home for lunches and snacks. Skip sandwich bags and opt for reusable containers, cutlery and drink bottle.
2. Switch light bulbs to LED or CFLs. On average, it costs $250 a year in energy costs to light your home with incandescents. Save $150 by going with LED or CFLs. They’re more expensive initially, but will last many times longer.
3. Review and negotiate your service plans––phone, internet, cable & tv content.
4. Invest in topping up your insulation. Attic insulation can settle and compact over time, diminishing its original R-value and increasing heating/cooling costs. Topping it up with a quality batt insulation, like Roxul Comfortbatt, will immediately help improve the comfort of your home and reduce your monthly energy bills.
5. Pay off credit card debt and swap cards for lower interest rate options.
6. Install low-flow water fixtures to cut down on excess water consumption.
7. Lower your thermostat by two degrees in cold weather and increase it by two degrees in warmer weather.
8. Launder your clothes in cold water and at off-peak times.
9. Avoid impulse shopping. Stick to your list and avoid “window shopping,” which tends to draw buyers in.
10. Save money on entertainment by looking for free activities. For options in your area, try a simple internet search. You might be pleasantly surprised at the wide variety of activities and entertainment available for no or low cost.
Collectively employing the tips above could potentially add up to thousands in annual savings, proving that sometimes change can be a good thing.
More Than a Third Think Interest Rate Increase to Have Negative Impact on Their Personal Finances
In a random sampling of public opinion taken by The Forum Poll amongst 1150 Canadian voters, about a third (BTM2: 34%) say the increase in the Bank of Canada’s prime interest rate will have a negative impact on their finances with (22%) saying it will have at least a somewhat negative effect, and (12%) saying it will have an extremely negative effect.
More than seven in ten (71%) said that, over the last the last three years, Canada has become more expensive for their family. Fewer than one in ten (5%) said that Canada has become less expensive for their family, while two in ten (20%) said that it’s neither more nor less expensive than 3 years ago. A small proportion (4%) said that they do not know.
The Forum Poll was conducted by Forum Research with the results based on an interactive voice response telephone survey of 1150 randomly selected Canadian Voters. The poll was conducted August 16-17, 2017.
If you have concerns about the last Bank of Canada rate hike, contact me and I would be happy to review your mortgage financing to make sure you are getting the most out of your mortgage.