Sorry Mr. Reaper, we’ve just figured out another way to delay your death grip! Research shows that giving an inheritance to another person while you’re alive – a concept known as “living gifting” – not only feels good, it can promote better physical and mental well-being and even help you live longer.

Health researcher and best-selling author, Stephen G. Post, summarizes it nicely:

“A remarkable fact is that giving, even in later years, can delay death. The impact of giving is just as significant as not smoking and avoiding obesity.”

Still not convinced? Here are 5 Powerful reasons to consider giving an early inheritance:

1. We Are Living Longer – According to Statistics Canada, for a 65-year old couple there is a one-in-two chance that one of them will reach the age of 92. Do your children really need an inheritance when they are in their mid-to-late 60’s?

2. Pay Down Their Mortgage – Let’s say mom & dad gave their son $200,000 to pay down his existing mortgage. A $200,000 gift, amortized over 25 years, is really worth over $340,000 when you factor in the interest he’ll be saving. And paying down the son’s mortgage will lower his monthly mortgage payments, providing extra cash-flow to start saving for his retirement or university education for his children. The mortgage professionals at Dominion Lending Centres can help with a variety of mortgage options.

3. Time Value of Money – Money that is available today, is worth more than the same amount in the future, due to its earning capacity. Of course, if the money doesn’t earn anything, then this principal does not hold true. Using the above example, let’s say the son invested the $200,000 gift with a conservative 5% target rate of return over 25 years. Using a 25% marginal tax rate, that $200,000 gift is really worth $502,033 – even after deducting income taxes!

4. Save on Probate – In Ontario, the value of the estate is reduced by an encumbrance against the property. In the above example, if the parents took out a mortgage, or a reverse mortgage, to give their son a $200,000 gift, then that debt reduces the value of the estate, which will result in the estate paying less in probate fees (the taxes you pay on the settling of an estate).

5. Create Lasting Memories – After you are gone, the actual dollar amount you leave to your children will soon be long forgotten. What your children will remember is the time they spent with you. So, the next time you suggest a family trip to Disneyland, or a weekend getaway, and they tell you “let’s do it next year when we’ll have enough saved”, if you have the means, consider booking the trip as part of an early inheritance. Create lasting memories while your health allows you to, because after all, “Procrastination is the thief of time” – Charles Dickens

Courtesy of Roland MacKintosh, Business Development Manager with HomEquity Bank

Calling all house hunters! We have a question for you—have you calculated what your mortgage will be? It is all too common for buyers to start house hunting before they truly know what their mortgage payment will work out to each month. This leads to homeowners being in over their heads. We believe in being proactive, not reactive, so today we are walking you through the steps necessary to calculate your mortgage.

There are a number of factors contributing to your mortgage calculation. These include:

1. Which Type of mortgage you choose (fixed or variable)

2. When you are purchasing your new home

3. The current interest rates

The key one out of those three are the interest rates. Interest rates vary on a daily basis and it is always recommended to pay attention to the current rates and future trends so that you can get the best deal. One very useful tool is an interest rate calculator.

An effective interest rate calculator can be an invaluable tool for those considering the possibility of buying a home. It gives you a chance to input your specific financial information as well as the current interest rate and other mortgage specifics in order to produce the amount of the payments you will make. Because different types of mortgages offer different options and specifics, the amount of interest that is charged will vary from loan to loan.

It is always a good idea to examine the different options available before making your choice. By inputting your specific information, you are better able to compare and contrast the different types of loans as well as interest rates to help determine which the best option for you is. Being able to look at the financial possibilities and outcomes of each of the different loans available to you is the best way to figure out what type of loan will work.

The annual interest rate calculator can be used to break down the amount of interest paid on your mortgage on a yearly basis. This will help you determine the anticipated yearly costs.

Annual interest rate calculators can also help you see how much could be saved by paying off a mortgage at an earlier date.

Speaking to a Dominion Lending Centres mortgage professional is always a great way to learn more about what options you have and how to make the best choices. They will work with you from the very start of this process right till the very end. Our goal is to make it as easy on you as possible; while still getting you the sharpest rate out there! Contact us today to get started!

Courtesy of Geoff Lee, AMP DLC GLM Mortgage Group

The mortgage process can seem huge and overwhelming. It can be an emotional process because a mortgage is the loan you are taking to buy a home for yourself and your family which makes it infinitely more than just a loan. Or it may represent the loan you are taking to refinance your home to invest in business dreams or to clean up some debts after life has thrown you sideways.

Likely you will head out to get your loan and, if you are human, are probably nervous about the whole process and whether you will even be approved. The new guidelines brought into place by the federal government have made it harder and you may even feel that you deserve a medal by the end of the process after jumping through all the hoops. The other part of the process is that we are inundated with information and we want to make sure that we are choosing the best mortgage that will protect us now and in the future. The easiest measure of mortgage ‘victory ‘seems to be the interest rate we are offered. What rate did you get is a hot topic after a home is purchased and it seems a no brainer that the one with the lowest rate is the clear cut winner in that conversation, but it is time to challenge that assumption and to do so we are going to look at just two normal situations. The fact of the matter is that you need to look beyond rate. Of course it is important as the lower the rate, the lower your payment but at the end of the day there is more to it than rate.

The Case of the Mortgage Penalty

Client is a regular person. Good credit, saved up the down payment and is ready to purchase a home. Receives two offers for the mortgage both at the best rate of the day. Chooses option A through her home bank as she likes the ‘security’ of bricks and mortar locations. Fast forward to down the road and sadly the client is separating and needs to payout the mortgage. Had she thought to ask she would have known that the penalty is calculated very differently from lender to lender and she would have saved herself thousands; this information is readily available online and asking questions before signing is the way to go.

The Case of the Self Employed

Client is a hard working tradesman guy who has saved 15% to put down on a home but needs to state his income given that he cannot verify it traditionally. Option A takes him to a mainstream lender who has to go through the mortgage insurer. Option B takes him to a B lender who will not through the insurer but charges a higher rate and a fee.

Let’s assume a mortgage amount of $250,000

Lender A – Rate is 2.79% for a 2 year term and the mortgage insurance fee is 3.75%

Lender B- Rate is 4.89% and the lender fee is 1%

It seems simple until you realize that the difference between the two fees is $7,235 and even though he will pay a higher amount monthly, he will actually owe $3,000.57 less at the end of the term as he borrowed less overall. So there was no so called victory in achieving the lowest rate but the client did in fact save himself a lot of money.

The point is that your mortgage is made up of far more than a rate and the onus is on you to make sure you are getting the best mortgage overall even if you lose the water cooler bragging rights. As you can see in just two examples, there is a lot of money that can be saved. Be sure to contact your local Dominion Lending Centres mortgage professional who can help you find the right mortgage for you.

Courtesy of Pam Pikkert,  AMP – DLC Regional Mortgage Group

More than a third of first-time homebuyers in Canada are single. If you’re thinking of joining this group, here’s what you need to do and know before jumping into homeownership.

Study the market.

Identify neighbourhoods you want to live in and check to see how much properties in that area are selling for.

Next, figure out how much you can afford. Remember to include estimates for property tax, utilities, insurance and any other expenses you don’t pay as a renter (condo fees, for example). Start with this calculator.

Assemble your team.

A home purchase should involve financial, legal and real estate professionals. Before first-time homebuyers start exploring properties, they should get a copy of their credit report (www.equifax.ca) and examine it closely.

If there is a history of missed or late payments, both of which can bring your number down, start a plan to change your standing by making regular payments on time. (Caution: there is no quick fix for a credit report; beware of companies that offer to change or “fix” yours for a fee.)

If you don’t already work with a financial advisor, consider booking a meeting with one. Reviewing your entire financial picture—debts and assets, insurance and investments, as well as budgets—is something that a professional can help you understand and offer strategies to improve.

Ramp-up savings.

Pare back expenses before making a home purchase. Why? Finalizing the deal on homeownership will include one-time expenses (closing costs and land transfer taxes, for starters) that need to be paid before move-in day. Homeownership will also bring new on-going expenses (such as property tax and utilities).

Subtract what you currently pay for housing from the estimated cost of living in the new home. Put the difference in a high-interest savings account. Here is a test: if you can make that payment every month, then you likely can afford the home you have your eye on. For tips on creative ways to save for a down payment go to read:

Consider help from family.

According to a recent Genworth Canada First-Time Homeownership Survey, first-time homebuyers in Toronto and Vancouver tend to have higher down payments than buyers in other parts of the country. That is due partly to larger savings of buyers in those areas, but also to larger gifts and loans from family.

A gift or loan from family can be a great help, but this is an arrangement that shouldn’t depend only on a hug and a handshake. Consider drawing up a contract spelling out the specifics of the deal.

How much money is being provided? Does it need to be paid back and, if so, when? If your family member will be sharing the home with you, how much will each of you be putting towards regular expenses, the down payment, or the closing costs? In whose names will the utility bills be set up, and whose name will be on the property title?

Hire a lawyer to do this paper work. That doesn’t have to involve many billable hours, especially if, before meeting the lawyer, you have an open conversation with your family and agree on answers to the above.

Another avenue worth exploring is the Genworth Canada Family Plan, which is meant to help another family member get into a home for a variety of reasons, including a parent who wishes to help an adult entrepreneurial child buy a home, or a parent helping to buy a home for an adult child at a post-secondary educational facility. With the Family Plan it’s important to note that the individual occupying the home must be on title to the property along with the co-applicant. This is not intended for use as a secondary dwelling. The down payment must be from their own resources, so gifts are ineligible.

Protect yourself

Although 35% of first-time homebuyers are buying on their own, many will partner up later.

If you start a relationship and allow another person to move into your home, that person may eventually have legal rights in relation to your home. How does that happen? If you live together long enough, you and your partner may become common-law spouses and that may trigger rights and responsibilities for you both.

When do you and your partner go from couple to common-law? The amount of time you spend living together is the main determining factor and varies from province to province.

How can first-time homeowners protect themselves? With an honest conversation about expectations and specific responsibilities. The main question is what will happen to the home if you split up? Consider a cohabitation agreement (again, with the help of a lawyer) to cover everything you agree to verbally.

Make sure to also outline the nitty-gritty details of day-to-day finances: how will you split the regular bills and when will they be paid? Which one of you will be responsible for making sure those payments are made on time? If there is a major expense, such as a roof repair or furnace replacement, will you both contribute?

For more tips on creative ways to save for a down payment go to www.homeownership.ca and speak with your Dominion Lending Centres mortgage professional.

Courtesy of Marc Shendale, Genworth Canada – Vice President Business Development

We are all familiar with the banks and local credit unions, but what are monoline lenders and why are they in the market?

Mono, meaning alone, single or one, these lenders simply provide a single yet refined service: to fulfill mortgage financing as requested. Banks and credit unions, on the other hand, offer an array of other products and services as well as mortgages.

The monoline lenders do not cross-sell you on chequing/savings account, RRSPs, RESPs, GICs or anything else. They don’t even have these products and services available.

Monolines are very reputable, and many have been around for decades. In fact, Canada’s second-largest mortgage lender through the broker channel is a monoline lender. Many of the monoline lenders source their funds from the big banks in Canada, as these banks are looking to diversify their portfolios and they ultimately seek to make money for their shareholders through alternative channels.

Monolines are sometimes referred to as security-backed investment lenders. All monolines secure their mortgages with back-end mortgage insurance provided by one of the three insurers in Canada.

Monoline lenders can only be accessed by mortgage brokers at the time of origination, refinance or renewal. Upon servicing the mortgage, you cannot by find them next to the gas station or at the local strip mall near your favorite coffee shop. Again, the mortgage can only be secured through a licensed mortgage broker, but once the loan completes you simply picking up your smartphone to call or send them an email with any servicing questions. There are no locations to walk into. This saves on overhead which in turn saves you money.

The major difference between a bank and monoline is the exit penalty structure for fixed mortgages. With a monoline lender the exit penalty is far lower. That is because the banks and monoline lenders calculate the Interest Rate Differential (IRD) penalty differently. The banks utilize a calculation called the posted-rate IRD and the monolines use an IRD calculation called unpublished rate.

In Canada, 60% (or 6 out of every 10) households break their existing 5-year fixed term at the 38 months. This leaves an average 22 months’ penalty against the outstanding balance. With the average mortgage in BC being $300,000, the penalty would amount to approximately $14,000 from a bank. The very same mortgage with a monoline lender would be $2,600. So, in this case the monoline exit penalty is $11,400 less.

Once clients hear about this difference, many are happy to get a mortgage from a company they have never heard of. But some clients want to stick with their existing bank or credit union to exercise their established relationship or to start fostering a new one. Some borrowers just elect to go with a different lender for diversification purposes. (This brings up a whole other topic of collateral charge mortgages, one that I will venture into with another blog post.)

There is a time and a place for banks, credit unions and monoline lenders. I am a prime example. I have recently switched from a large national monoline to a bank, simply for access to a different mortgage product for long-term planning purposes.

An independent mortgage broker can educate you about the many options offered by banks and credit unions vs monolines.

Courtesy of Michael Hallett, AMP – DLC Producers West Financial

A sincere thank you to our regulators, Ministers, MP’s, etc. for your concern about my personal debt figures.

And thanks for channelling this concern into recent deep and drastic cuts to my personal (home financing) purchasing power. Although certainly chopping Canadian families’ ability to buy a home in today’s rising market by a whopping 20% in one abrupt move seems a tad aggressive. Especially considering the many prudent cuts and measures introduced since 2008 which were enacted with reasonable industry consultation and reasonable rollout periods.

Again, thanks for the attention and concern for my own debt levels.

Perhaps we should talk about yours though; after all our nation’s fiscal order is in your hands. And you seem to be paying a lot of attention to this debt-to-income topic. At least where it applies to my own household.

But how do things look for the federal government’s debt-to-income ratio?

Let’s have a peak at your (or our collective) “house’s” debt to income ratio. And since the metric does not factor in equity, net worth, savings, or any assets at all when applied to us, we’ll leave them equally absent from this conversation.

Federal Gross income: $291.2 Billion
Federal Gross Debt: $1.056 Trillion

This appears to be a 363% debt-to-income ratio.

Why that’s twice our individual household debt-to-income ratio.

Double!

2.17 times higher to be precise.

And isn’t my mortgage debt capped for complete payout at 25 or 30 years – the maximum amortization allowable. Tell us again about the actual amortization timeline of the current national debt.

To Infinity and Beyond!

I believe the effective amortization of the national debt is currently just a touch beyond 25 years, or even 30 years; currently it sits at something closer to infinity. As happens when one steadily spends more than they make.

Perhaps you can tell us about your plans to get our nation’s debt to income level reduced below 167% – since this is apparently a concerning number. And once it is below 167% feel free to talk to me about my own debt-to-income ratio.

As things stand you look a bit like that guy at the party with seven shots of rye in him lecturing us all on how we should never consume more than three shots. Yet we are all going to get up tomorrow and work hard, and we had better because for all your worrying about us we need to hustle every day to cover your own fiscal imprudence.

Perhaps it is time for an early night, some introspection, and some internal house cleaning.

Same rules (ought to) apply.

Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts

The human brain struggles with distinguishing between a real or imagined threat.

Is it a snake? Or just a shoelace?

One may kill us quick, and so we react fast and think it through later… or maybe never.

Is the often cited, rarely critiqued, ‘debt-to-income’ ratio a snake or a shoelace?

A killer lying in wait or a meaningless footnote?

Federal regulators, and most mainstream media, would have us believe that at 167% it’s an Anaconda slithering through our sheets while we sleep, readying to swallow each household whole.

Two key points often absent from the debt-to-income conversation:

1.      The average household debt figure is largely irrelevant to the financial success of our individual household(s)

2.      What is my own debt-to-income ratio? And am I worrying about it at, say, 500%?

Perceived Reality

If one were to stop a citizen on the street and ask them if they believe today’s low interest rates have allowed Canadians to borrow more money than they should have most would say yes.

If one were to stop a citizen on the street and ask them if they believe today’s low interest rates have allowed housing prices to rise too high too fast, most would say yes.

If on the heels of these two questions you then asked one more question: Should government step in and tighten regulations?

Most at this point with this context would say yes.

And these citizens would be wrong.

Also by “yes” what these citizens mean to say is “regulate my reckless neighbours – not me, I’m cool.”

Framing matters

Let’s ask a few more questions.

Would it sound reasonable to take on a $2,000 mortgage payment with a household income of $100,000?

Is it fair to say that the same $100,000 per year household income could support a $2,600 monthly housing payment?

Likely we are going to get a “yes” response to both of these questions. As indeed these numbers are reasonable by any measure.

Numerical Reality

The $2,000 per month payment represents a monthly payment at today’s interest rates on a $500,000 mortgage balance.

Ah but what if rates double you ask? What if indeed…

The $2,600 per month payment represents a monthly payment at double today’s rates (when that $500,000 mortgage balance comes up for renewal).

Readers quick with numbers can see where this is headed, this household with their $500,000 mortgage balance and a $100,000 household income has a debt-to-income ratio of 500%.

Are they freaking out, suffering desperate times, readying a kidney for sale?

Not at all.

To be fair they do have concerns about debt levels – your debt levels!

The 500% debt-to-income household has things under control; they know that ~$1,000 of that ~$2,000 payment is principle reduction, a forced savings plan. They also know that the ~$1,000 interest component per month (fixed for the next five years) is way less than what they were paying in rent last year, and unlike rent this expense will not rise for five full years…and their mortgage debt balance will be dropping steadily. (by ~$60,000 over the first five years).

How many renters will see a ~$60,000 increase in net worth over the next five years? (this amount assumes 0% movement in home prices)

Nonetheless citizens remain concerned. Concerned that today’s low rates have allowed you to borrow more than you should have – and as you know, you are A-OK.

Guess what, your neighbours are OK too.

They are OK with a 500% debt-to-income.

Although few in Canada actually have a debt-to-income ratio this high; in fact Bank of Canada research shows that just 8% of Canadians have a debt-to-income ratio above 350%.

The example used in this piece is in fact a complete outlier, and not at all the norm; we are far more conservative than even these comfortable figures.

Tomorrow we discuss houses, in particular – glass houses and those who reside in them.

Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts

ur Government has concerns about their role with CMHC — essentially a mortgage insurance company — a role in which taxpayers are technically liable for their clients’ actions and behaviour (despite current CMHC premium reserves on hand to withstand up to a 40% market devaluation).

These concerns were apparently part of justification used regarding recent significant changes to not only the amount of debt Canadians can access (~20% less mortgage money) but also just which companies Canadians can access mortgage debt through. Limiting exposure to potentially bad behaviour seems a common refrain in Ottawa these days.

But what about bad behaviour with regard to unsecured debt?

‘Not our problem’ they state. Citing their lack of guaranteeing unsecured debt as they do mortgage debt.

Let’s view this through the lens of an analogy using cars, booze, and sales tactics.

Instead of mortgage insurance let’s call it car insurance, and consider the sales process of two different types of car dealers.

Company #1 strives to maximize profits by giving away a six pack of wine coolers (a new credit card) and a 40oz bottle of whisky (an unsecured line of credit) with every car (mortgage) sold. They place these ‘extras’ right there on the passenger seat at the time of delivery. Easy access.

Now hey, you don’t have to open these products up, and they cost you nothing if left unused. After all you only pay for what you consume. The sales agent is directly compensated for upselling you on the use of said wine & whisky; in fact their annual bonus depends upon it.

Company #2 has no Whisky (unsecured debt) to offer you. Their business model is simply to place you the right car (mortgage) for you and that is it. Often at a sharper price, with a few more bells and whistles, and a vastly superior trade in value (prepayment penalties). They send you on your way with a smile and a wave. No follow-up to cross-sell you on multiple other tempting products, like the wine & whisky for example.

Admittedly not everyone is going to crack that bottle open and consume the entire thing during their first drive home. But it seems reasonable, at least it should be to the insurance company (The Federal Government) witnessing this sales process, that there ought to be some greater concerns about the increased claims from company #1 and perhaps some stiffer regulations and legislation may be in order – especially when the government’s own research shows that twice as many clients of company #1 (0.28%) get into trouble and make a claim is do clients of company #2 (0.14%).

Table 1-A: Characteristics of median mortgage borrowers 2013Q1–2016Q3

*1. Banks and credit unions

*2. Based on mortgages in pools of National Housing Act Mortgage-Backed Securities as of 2015Q4

Sources: Department of Finance Canada, Canada Mortgage and Housing Corporation and Bank of Canada calculations

Instead our government appears to see things differently.

When the government decided to enact stiffer regulations and restrictive legislation they called only on Company #1 for consultation, and interestingly the net result of said consultation and deliberation is a set of new regulations which threaten the very existence of Company #2.

Despite the research clearly indicating a more prudent approach to the business by Company #2 than that of their competition (Company #1).

Taking into account the relative youth of Company #2 (about a decade) vs the age of Company #1 (~150yrs) the variation of the equity (loan-to-income) held by each of its clients is more than reasonable and understandable. The narrow difference in total debt-to-service reflects the generally conservative nature of Canadians and further supports the prudent processes in place at Company #2.

Why is our government effectively trying to legislate Company #2 out of business?

Why is our government consulting only with Company #1 when the government’s own research demonstrates the people at Company #2 are doing twice as good a job when it comes to avoiding problem clients?

Food for thought.

Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts

During a recent trip to our nation’s Capital with folks from Dominion Lending Centres and other mortgage groups, an Ottawa insider made an interesting comment: “We don’t care about consumer debt, because we don’t guarantee it.”

This comment was made in an effort to justify recent increased restrictions placed on borrowers taking out insured mortgages (i.e. backed by CMHC, Genworth, or Canada Guaranty – effectively the federal government) due to increasing concerns in Ottawa around the optics of “taxpayer backed” mortgages.

This use of such hot button language would be laughable if taxpayers understood a few key things about CMHC in particular:

1. It is incredibly profitable and has generated tens of billions of general revenue for the Federal Government over the years. (This is arguably one of the most profitable Crown Corporations ever created).
2. The actual numbers as to just what CMHC (taxpayers) are “on the hook” for. (see chart below).
3. The incontrovertible fact that the government will, should the need arise, bail out the privately-owned banks should they ever truly misstep and get into trouble – meaning all debt in Canada is truly government guaranteed when you get right down to it.

Source: CMHC

What hit me as most stunning about such a laissez faire attitude towards consumer debt, setting aside the question of protecting consumers from themselves (got a pulse? No job? No established credit? No problem, here is a 14% car loan and a $20,000 credit card) was that the very people managing these “taxpayer guaranteed” mortgages cannot see the problem with a system in which the major banks approve the mortgage itself under strict guidelines and then the moment it is approved offer the newly leveraged client an additional $5,000 – $80,000 in unsecured credit “just in case” the new homeowners “need” new furniture, a new car, a vacation, etc.

How is that not a significantly relevant factor in the stability and security of the guaranteed mortgage product?

The real irony in this?

The Fed backs these mortgages through two sorts of lenders, and has arguably been creating policy to heavily restrict the competitive ability of one of the two channels. More tomorrow on just how misdirected the regulations being imposed are in their targeting of one supplier channel over another.

Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts

So 2016 was an exciting year in the mortgage world! The problem is that we mortgage professionals really hate it when things get exciting in our world. Between the economy and the federally mandated mortgage rule changes and their ensuing fallout, it is now more important than ever to get a solid pre-approval in place. I am not just speaking to first time home owners either! Before you list your current home or refinance your mortgage or consider buying a rental, you need to make sure that you qualify under the new mortgage rules.

The biggest change by far was the increase to the mortgage qualifying rate. Basically, no matter which term you are selecting you will have to qualify at the Bank of Canada posted rate which is currently 4.64%. The mortgage rate you are given will be considerably less than this and will be based on whichever term you choose. The rationale is that there is no way rates were going to stay at 2.39% and all of a sudden a lot of people could be hit with a significant mortgage payment increases which could mean increased foreclosures. When you remember that our federal government is actually financially backing those mortgages through the mortgage insurers, they had a vested interest in keeping the housing market secure.

So the things you need to know:

1. Rates have climbed since the rule changes were announced, so if a new home is in your future get a rate hold in place so you are protected against further increases. Most are good for 120 days.

2. Make sure they are checking your credit and not just seeing how much you are qualified for based on your income. Can you imagine selling your home only to be told that you do not qualify for the financing on the next because of something on your credit bureau? It has happened, I assure you.

3. Given the variety of ways in which we all get paid, you also need to make sure your pre-approval is solid given your situation. For example, the mortgage lenders require a 2 year history on all variable income. That means if your income is commission, bonuses, overtime or shift differential then you will need a 2 year history of it before it can be used for the mortgage qualification.

4. Porting is an area which is slightly misunderstood. You will have to qualify for the mortgage under the new rules even if you are just moving the mortgage from A to B. Please refer back to the previous horror story of the people who had sold and then could not buy a new home.

5. Ironically, the changes now mean that if you are refinancing your home, there is a possibility that you will have a higher mortgage rate than someone putting 5% down. This is because the 5% down mortgage is insured while yours with the significant amount of equity is not making it a higher risk for the bank. If you are considering a refi you may want to do it sooner rather than later given the rate increases.

6. Rental properties have been heavily hit by the changes. Our economy means that fewer lenders are willing to consider these mortgages to start with and those that still are have upped the ante. Some have increased the minimum down to 35% from 20%. Others require a very strong net worth in liquid assets. If you have multiple properties make sure they are reporting on your taxes.

So that’s about that. A solid pre-approval from a qualified mortgage professional is a very good peace of mind strategy for both the new home buyer and those veteran buyers. When you’re ready to talk of if you need more information, the mortgage professionals at Dominion Lending Centres are here!

Courtesy of Pam Pikkert, AMP – DLC Regional Mortgage Group