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Summary of Mortgage Rule Changes
Happy New Year !
I wanted to take this opportunity to say thank you for your business and your help in making 2016 a successful year.Your supportmeans the world to me. I look forward to 2017 being another great year of helping people find their perfect mortgages!
As I am sure you are aware, there were a lot of unexpected mortgage policy changes in 2016.I am going to do my best to keep you up to date in 2017 with regular postings regardingpolicy, product and market changes that may impact you. You can find these updates on my facebook page, website, twitter and my blog. Please see links below.
With all these rule changes it is more important than ever to ensure you have someone experienced working for you! Let me put my 20+ years to work for you!
Below is a summary of the changes that came into effect in 2016.I havealso included some valuable information regarding the recently announced B.C. Home Owner Mortgage and Equity Partnership program, also known as theFirst Time Home Buyers Interest Free Loan program. There are still a number of questions to be answered regarding this program and I will keep you updated as we get the most recent news.
Summary of the New Rules and Down Payment Program
On October 17th, new housing policies came into effect and have left many Canadians unsureabout how these have impacted them. Outlined below is a very clear and concise summation of howyou have been affected.
How do the changes affect you?
High Ratio Mortgages
For home buyers with less than 20% down payment, mortgage qualification will be based on the Bank of Canada posted rate. This is to stress test borrowers, as Bank of Canada rates are higher than the rates offered by banks and lenders.
Low Ratio Mortgages
All remains the same for home buyers with a down payment of 20% or more. Specifically, borrowers with down payments of 20% or more will still be able to qualify for mortgages using the contract rate - unless the mortgage has a term of 4 years or less and/or is a variable rate mortgage, which are subject to the new Mortgage Qualifying Rate.
Understanding Key Mortgage Terms:
High Ratio Mortgage-A mortgage in which the borrower has a down payment of less than 20% of the purchase price.
Low Ratio Mortgage-A mortgage in which the borrower has a down payment equivalent to 20% or more of the purchase price.
Mortgage Qualifying Rate-The Bank of Canada conventional 5 year fixed posted rate. On average, 2% higher than rates offered by lenders.
BC HOME Partnership Down Payment Program
Last week the BC government announced the Home Owner Mortgage and Equity (HOME) Partnership. This program will provide down payment assistance to home buyers with less than 20% down.
Through the B.C. HOME Partnership program, the province is helping first-time home buyers by contributing to the amount they have already saved for a down payment with a loan that is interest-free and payment-free for the first five years.
The brief details about the program are as follows:
The B.C. HOME Partnership program will meet the buyers contribution up to 5% of the homes purchase price, to a maximum purchase price of $750,000.
After 5 years, buyers can either repay their loan or enter into monthly payments at current interest rates.
Loans through the program must be paid off in 25 years - the same length as most mortgages.
The program is set to start on January 16, 2017.
To be eligible for the program, eligible first time buyers must meet the following conditions:
Have been a Canadian citizen or permanent resident for at least five years.
Have resided in British Columbia for at least one year immediately preceding the date of application.
Be a first-time buyer who has not owned an interest in a residence anywhere in the world at anytime.
Use the property as their principal residence for the first five years.
Purchase a home that has a purchase price of $750,000 or less (excluding taxes and fees).
Obtain a high-ratio insured first mortgage on the property for at least 80% of the purchase price. Down payment of 5-19%
Have a combined, gross household income of all individuals on title not exceeding $150,000.
Have saved a down payment amount at least equal to the loan amount for which the buyer applied.
The B.C. Government will start accepting applications for the Down Payment program on January 16, 2017.
If you have any questions regarding the mortgage rule changes, downpayment program or your situation in general, please call or email me anytime. I can answer all your questions about the process, run you through your options, and make sure you get expert advice.
Jacquie Claggett | Bayfield Mortgage Professionals | 604-302-1502 | firstname.lastname@example.org|http://www.valleymortgages.ca/
Canadian home sales fall further in July
According to statistics released today by The Canadian Real Estate Association (CREA), national home sales declined further in July 2017. Highlights:
National home sales fell 2.1% from June to July.
Actual (not seasonally adjusted) activity in July stood 11.9% below last Julys level.
The number of newly listed homes edged back by 1.8% from June to July.
The MLS Home Price Index (HPI) was up 12.9% year-over-year (y-o-y) in July 2017.
The national average sale price edged down by 0.3% y-o-y in July.
Julys interest rate hike may have motivated some homebuyers with pre-approved mortgages to make an offer, said CREA President Andrew Peck. Even so, sales activity continued to soften in the Greater Golden Horseshoe region. Meanwhile, sales and prices in Montreal continue to strengthen. All real estate is local, and REALTORS remain your best source for information about sales and listings where you live or might like to.
July marked the smallest monthly decline in Greater Golden Horseshoe home sales since Ontarios Fair Housing Plan was announced in April, said Gregory Klump, CREAs Chief Economist. This suggests sales may be starting to bottom out amid stabilizing housing market sentiment. Time will tell whether thats indeed the case once the transitory boost by buyers with pre-approved mortgages fades.
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Decline in single-family component moderated by gain in multi-family dwellings
Canadian municipalities issued $8.1 billion worth of building permits in June, up 2.5% from May and the second highest value on record. Higher construction intentions for multi-family dwellings and commercial buildings were mainly responsible for the national increase. All building components reported gains in June, except for single-family dwellings.
The value of residential building permits fell 0.9% in June to $5.0 billion, the fourth decrease in five months. The decline was mainly the result of lower construction intentions in four provinces, notably Ontario.
In June, the value of permits for single-family dwellings decreased 12.5% to $2.4 billion. Seven provinces registered declines, with Ontario being the main contributor to the decrease.
Conversely, construction intentions for multi-family dwellings rose 12.5% in June to $2.7 billion, marking a third consecutive monthly increase. Seven provinces registered gains, led by Ontario and British Columbia.
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