Upcoming Stress Test Change

Upcoming Stress Test Change

Upcoming Stress Test Change

Today, Minister of Finance, Bill Morneau, announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages, also known as the “stress test.” These changes will come into effect on April 6, 2020. The new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus a two percent (2%) buffer.

Additionally today, the Office of the Superintendent of Financial Institutions (OSFI) announced that it is considering implementing the same benchmark rate of the weekly median five-year fixed insured mortgage rate from mortgage insurance applications, plus a two percent (2%) buffer for uninsured mortgages, which will align minimum qualification limits for the insured and uninsured mortgage market.

MPC has been recommending uncoupling the stress test rates from the Bank of Canada posted 5 year fixed rate since its introduction to the insured 5 year terms in 2016. Setting the floating rate on the insured contract rate will make the test more dynamic and responsive to market and bond rates. We thank the government for acknowledging this issue and making these changes. We do, however, still consider a two percent (2%) buffer to be an onerous test level given the economic realities globally.

MPC’s 5th Parliament Hill day takes place tomorrow in Ottawa, with over 50 meetings scheduled with MPs, Senators, and senior policy officials. Our member volunteers will thank the government for making this first, much-needed adjustment to mortgage qualification in Canada, and continue to ask for additional support measures for those most impacted by the introduction of these tests; aspiring middle-class Canadians and would-be first-time buyers. Included in our asks will be the reintroduction of an insurable 30-year amortization for first-time buyers, and increases in the income maximum multipliers under the newly introduced First Time Home Buyers Incentive Plan.

We will continue to keep you informed of any new developments.

Minister Morneau Announcement >>
OSFI’s Announcement >>



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Reverse Mortgage Myths

Reverse Mortgage Myths

Reverse Mortgage Myths

Reverse mortgages have come a long way. They have evolved from a needs-based product to a solution that many financial professionals recommend as an important component of a comprehensive retirement plan.

Unfortunately, there are still many misconceptions regarding reverse mortgages. Below, the myths are separated from the facts. Watch this video:

Myth: The bank owns the home.
Fact: You always maintain title ownership and control of your home, and you have the freedom to decide when and if you’d like to move or sell.

Myth: You will owe more than your home is worth.
Fact: Clients can qualify for up to 55% of the appraised value of the home, 33% on average. Due to HomeEquity Bank’s conservative lending practices, you can be confident that there will be equity left in the home when the loan is repaid. In fact, over 99% of HomeEquity Bank’s clients have equity remaining in the home when the loan is repaid.

Myth: A reverse mortgage is a solution of last resort.
Fact: Many financial professionals recommend a reverse mortgage because it’s a great way to provide financial flexibility. Since it’s tax-free money, it allows retirement savings to last longer.

Myth: You cannot get a reverse mortgage if you have an existing mortgage.
Fact: Many of HomeEquity Bank’s clients use a reverse mortgage to pay off their existing mortgage and other debts, freeing up cash flow for you to use as you wish. How great would it feel to be free of regular mortgage payments?

YourMortgageYourWay.ca has Certified CHIP Reverse Mortgage Specialists ready to answer any questions you may have!



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Canada’s First Time Home Buyer Incentive Program

Canada’s First Time Home Buyer Incentive Program

Canada’s First Time Home Buyer Incentive Program

The new First-Time Home Buyer Incentive allows eligible first-time home buyers, who have the minimum downpayment for an insured mortgage, to apply to finance a portion of their home purchase through a form of shared equity mortgage with the Government of Canada.

How Do I know if I Qualify for This Incentive?

At least one homeowner must be a first-time home buyer, which is considered as the following:

  • You have never purchased a home before
  • You have gone through a breakdown of marriage or common-law partnership (even if the other first-time homebuyer requirements are not met)
  • In the last 4 years, you did not occupy a home that was occupied by the home buyer or their spouse

How Does my Income Affect Qualifying for this Incentive?

Your total qualifying income must be $120,000 per year or less. Remember you will still need to qualify the income requirements set out by lenders and mortgage loan insurers.

Do I Still Need Mortgage Insurance?

Mortgages must be eligible for mortgage loan insurance through either Canada Guaranty, CMHC or Genworth. The first mortgage must be greater than 80% of the value of the property and is subject to a mortgage loan insurance premium. The premium is based on the loan-to-value ratio of the first mortgage only. That is, the first mortgage amount divided by the purchase price. The Incentive amount is included with the total down payment.

Do I Have to Pay the Government Back

The first-time home buyer will be required to repay the Incentive amount after 25 years or when the property is sold, whichever comes first. The home buyer can also repay the Incentive in full at any time, without a pre-payment penalty. Refinancing of the first mortgage will not trigger repayment.

How is the Repayment Calculated?

Repayment is based on the property’s fair market value at the point in time where repayment is required. If you receive the 5% Incentive, you will pay 5% of the home’s current market value. If you received 10%, you will pay 10% of the home’s current market value.

Does this Affect the Type of Property I can Purchase?

Yes, there are some guidelines for the type of property, and the intention of ownership. Eligible residential properties include:

  • New construction
  • Re-sale home
  • New and re-sale mobile/manufactured homes Residential properties can include 1 to 4 units.

Types of Residential Properties Include:

  • family homes
  • Semi-detached homes
  • Duplex
  • Triplex
  • Fourplex
  • Townhouses
  • Condominium units

Depending on the eligible property type, the Government of Canada will offer 5% for a first-time buyer’s purchase of a re-sale home, and 5% or 10% for a first-time buyer’s purchase of a new construction. The property must be located in Canada and must be suitable and available for full-time, year-round occupancy. Additionally, you can NOT purchase the home with the intention of renting, as investment properties are not eligible.

Have More Questions About Mortgages? Contact YourMortgageYourWay.ca for a Free Consultation



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No Stress Test Required

No Stress Test Required

No Stress Test Required

Mortgage App

Whether you’re in the market for a new mortgage or looking to renew, switch, or refinance your existing mortgage, we make it convenient and straightforward. No stress test required!

 

 

Here are some of the ways we are making your home investment more affordable*: 

1.

Increase your home budget (maybe upgrade your neighbourhood as well).
Conventional, income-qualified purchase now 3.34%, qualifying at the Contract Rate and with a 30-year amortization. No Stress Test and no insurance required.

2.

Refinance your existing mortgage at a lower rate (so you have more money in your pocket).
Conventional, income-qualified refinance now 3.44% and qualifying at the Contract Rate and with a 30-year amortization. No Stress Test required.

3.

Self-employed? We give you a break as well.
Conventional Non-Income Qualifying program purchase and refinance now 3.64% and qualifying at the Contract Rate and with a 30-year amortization available. No Stress Test required.

 

Our Mortgage Calculators https://yourmortgageyourway.ca/calculators/ show how much you can save by changing your payment frequency or making extra payments, as well as helping you understand how much you can afford for your new home.

Plus, YourMortgageYourWay.ca takes the stress out of talking to a Mortgage Agent!

Please get to know us at https://yourmortgageyourway.ca/team-contact/

* Available for new files only- not available for existing applications.
Limited time offer.
Subject to change without notice.

 



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Why is it so hard to get a mortgage when you’re self-employed?

Why is it so hard to get a mortgage when you’re self-employed?

Why is it so hard to get a mortgage when you’re self-employed?

Mortgage for self-employed, Toronto, Ontario

By Lucy Gagliardi

More Canadians are working for themselves or on contract these days. With nearly 20% of all income earners in Canada being self-employed (at least part-time), we often wonder why it’s so difficult for this growing demographic to obtain a mortgage.

Many self-employed folks would agree that the greatest advantage to being in business-for-self is the ability to write-off many personal expenses and ultimately pay less income tax. But the not-so-obvious downside is that it can be difficult to prove your income, and after taxes and deductions, you often show less income on your tax return. As a result, you may qualify for a lower mortgage amount, or not qualify at all when it comes to applying for a mortgage.

Did you know that you might still qualify for a mortgage, even if you don’t report much net income on your tax returns?

 

Posted by Lucy Biocca Gagliardi on Friday, March 2, 2018

 

Self-employed mortgages are a specific type of mortgage product that is geared toward Canadians who have their own business. Mortgage agents have access to multiple lenders and will negotiate on your behalf. As you’ll see in Lucy’s video, you will need the following documents to get started:

  1. 6 months’ bank statements
  2. Business license or articles of incorporation
  3. Invoices and/or contracts

Remember, just because you’ve qualified for a mortgage in the past, doesn’t mean you will qualify for a mortgage in the future (even if your financial situation has remained the same or gotten better). Mortgage rules have changed and securing mortgage financing can be more difficult. You might also need other supporting documentation such as: proof that your down payment has not been gifted, proof that your HST is paid in full and your personal/business credit scores.

YourMortgageYourWay.ca knows mortgages! We will connect you to the lender most suited to Your Mortgage needs.

Qualifying for a mortgage is getting tougher and if you have poor credit and unable to meet a lender’s requirements to get a mortgage, then getting someone to co-sign your mortgage could be the way to go.

Learn about the ways to co-sign a mortgage:
1. Co-borrower (on title) the same as a spouse or anyone else who you are actually buying the home with.
2. Guarantor (not on title) responsible for the loan should the borrower go into default.

If you have any other questions, give us a call and we’ll walk you through the mortgage process or visit: yourmortgageyourway.ca/get-pre-approved/



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Strategies to improve your credit and reduce your debt

Strategies to improve your credit and reduce your debt

Strategies to improve your credit and reduce your debt

Credit card payment

By Terrilyn Moore

Let’s face it, home ownership comes with additional costs such as property taxes and renovations. The burden of debt can be stressful, so take advantage of these helpful debt reduction strategies right away and start sleeping better at night!

 

First, managing credit card debt and re-establishing good credit habits

The best way to settle credit card debt is to start off small. Start to make the minimum payments on your credit cards with high interest rates and then maximize payments on cards with low interest rates.

“When helping to rebuild clients’ credit scores, I remind them to always pay your credit card on time, all the time. Don’t go over 50% of your limit”, Terrilyn Moore, Mortgage Broker, YourMortgageYourWay.ca. “Use it, pay it, use it, pay it…”

 

Five tips to re-establishing good credit habits:

 

1

Obtain a copy of your credit report to find out where you stand

 

2

Reduce the amount of debt you owe to improve your debt to income ratio

 

3

Set up automatic bill payments from your account to ensure you never miss a due date

 

4

Be sure to pay more than the minimum amount required and pay smaller, more frequent payments

 

5

Keep all your balances to a minimum. Racking up big debt can impact your score, even if you pay your bills on time

 


 

Once you re-establish good credit habits, you’ll be able to access better financial products at a lower interest rate.

Want to know more about what affects your credit rating and how can you improve it? Read this Global News article. http://globalnews.ca/news/1858868/what-affects-your-credit-rating-and-how-you-can-improve-it/

 

Second, hire a professional to help you consolidate debt

The goal of a credit card consolidation loan would be to make frequent payments at a set amount each month to pay off the credit card debt. When you make a decision about not only your mortgage but any of your financial needs make sure it is SMART – based on an educated and informed decision.

Each individual has different goals in their mortgage lifetime.  Some people want to pay off their home as soon as possible and others just want to make a minimal payment:

  • If your goal is to pay off your mortgage as soon as possible there are things that you can do to help you along the way. For example, if you change your payment options and tweak your amortization you can shave years off of your total mortgage lifetime and save thousands of dollars in interest.
  • If your goal is to create some cash flow, you can use the equity in your home. For example, you can save approximately $12,000.00 per year in interest alone just by consolidating. This could be $60,000.00 in 5 years.
    (information based on a $300,000.00 mortgage consolidating approximately $60,000.00 in debts and lowering interest rate by approximately 1.25% per year).

Here is a Client Success Story to explain the details:

Joe and Kathy (aliases to protect client identity) they were in a challenging financial situation. They had a mortgage of $147,599.73 with a five-year term @ 4.55% with 3 ½ years left in their term and credit card balances totaling $108,200.00. They were tired of paying high interest credit card monthly payments and they felt like they were never saving any money. We came up with a solution that cost less, and helped them save more.

 

Table rates

Dealing with debt can be overwhelming. The first step to financial freedom is to schedule a mortgage checkup.
G
ive us a call or visit https://yourmortgageyourway.ca



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