There have been many changes
in the mortgage world in the past 3 years, more specifically in the past 6-12
months. There are many changes to lender policies that have unfortunately moved
qualified buyers to a position where they cannot qualify for a mortgage or
perhaps have fewer options. There was a well written article in Canadian
Mortgage Trends last week (please
take a moment to read it here) and here are a few changes they have
highlighted:
· Some lenders now factor in a monthly payment for secured credit lines with zero balance.
*this is by far creating the most issues
· On revolving unsecured credit, monthly payments are being set at 3% of the outstanding balance.
· Many lenders now calculate heating costs using a specific formula based on property size.
· Conventional variable-rate mortgages and fixed terms less than 5 years are now qualified using the Benchmark Rate.
Here are a few more changes that I have noticed as well:
· Interest rates and fees for purchasing rental properties have increased. Several lenders have stopped financing rentals all together
· Some lenders will no longer use 50% of potential rental income from basement suites
· Many will no longer do “stated income” deals, therefore self-employed applicants must qualify based on income claimed to CRA
· Applicants putting more than 20% down are almost always requiring an appraisal
· Many lenders are only offering their “rate specials” to applicants with less than 20% down payment
· Some lenders are requiring past tax returns regardless if they are using that income
· Some have changed their rental calculations for “non-subject” rentals which means less of that rental income can be used
These are just a few of the many changes and tightening across a variety of lenders. For more information, or with any questions please feel free to contact me today.
http://www.christinebuemann.com
· Some lenders now factor in a monthly payment for secured credit lines with zero balance.
*this is by far creating the most issues
· On revolving unsecured credit, monthly payments are being set at 3% of the outstanding balance.
· Many lenders now calculate heating costs using a specific formula based on property size.
· Conventional variable-rate mortgages and fixed terms less than 5 years are now qualified using the Benchmark Rate.
Here are a few more changes that I have noticed as well:
· Interest rates and fees for purchasing rental properties have increased. Several lenders have stopped financing rentals all together
· Some lenders will no longer use 50% of potential rental income from basement suites
· Many will no longer do “stated income” deals, therefore self-employed applicants must qualify based on income claimed to CRA
· Applicants putting more than 20% down are almost always requiring an appraisal
· Many lenders are only offering their “rate specials” to applicants with less than 20% down payment
· Some lenders are requiring past tax returns regardless if they are using that income
· Some have changed their rental calculations for “non-subject” rentals which means less of that rental income can be used
These are just a few of the many changes and tightening across a variety of lenders. For more information, or with any questions please feel free to contact me today.
http://www.christinebuemann.com
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