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More mortgage changes to come

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On June 27th, CMHC published their newly defined Debt Ratio Standards. These are the guidelines for calculating debt ratios and confirming income documents. These changes are set to be implemented by December 31st of this year. Many lenders have already adopted some of these changes however, Mortgage Brokers currently have access to numerous lenders who are still being flexible with their calculations. Please read the CMHC release for the full details  here. Here are the topics of discussion:

Income

·         Variable Income: No change. The average of the last 2 years unless it’s declining, then the lowest.

·         Self-employed Income (without traditional documentation to support income verification): No more “stated income” where the take the client’s word on their income. Must have documentation to support it. Most lenders have already adopted these policies.

·         Rental Income: Most lenders already use these. We may see more conservative amounts being allowed for rental income.

·         Guarantor Income: Not a significant change as co-signers typically prefer to be on title as well.


Debt

·         Unsecured Lines of Credit and Credit Cards:  3% of the balance to be used as the monthly payment instead of interest only payments. This could drastically impact an approval.

·         Secured Lines of Credit: Another change which could have a drastic impact as interest only payments are no longer allowed as monthly payments.

·         Heating Costs: Another significant change as this could potentially double the amount currently being used for heat and increase debt ratios.

It is important to note that these changes are for CMHC insured mortgages and both Genworth and CG have not stated whether they will follow suit immediately.

Here is a link to a great article that explains the new guidelines in detail click here

For more information on how these changes may affect you, please feel free to contact me today.

http://www.christinebuemann.com
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Location: 1596 3rd Avenue, Prince George, BC V2L 3G4, Canada

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