I provide my clients choice, through my extensive lender network and work daily within the Prime and Non-Traditional Markets to secure the best available mortgage. This enables me to deliver un-biased navigation of rates, terms and mortgage products, while working with my clients to ensure that they are educated on the financing process.
Pre-Qualification Purchase Builds & Draws Purchase + Improvements
Spousal Buyouts Refinances Debt Consolidation Equity Take Outs
Second Mortgages Combination Mortgages Reverse Mortgages Interest Only
Whether you have challenges with income, bruised credit, current or former bankruptcy, owe income taxes or GST or have no challenges at all, I have great products and rates that can maximize your mortgage and financial goals.
There is a Crack in Mortgage Qualifying – Do You have a Plan B when the Banks Say NO?
As most of us know, Banks, Credit Unions, Trust Companies and even Insurance Companies offer great discounted mortgage rates and wonderful products but only IF you can actually qualify for them. What does it take to qualify for this type of Discounted Mortgage, also known as an A or Prime Mortgage? You must be able to afford the mortgage based on the Bank of Canadas Qualifying Rate, also referred to as the Benchmark Qualifying Rate. Todays Qualifying Benchmark Rate is 5.19%. What does this mean? It means that despite your contractual discounted rate your bank, credit union, trust company or insurance company is giving you, you MUST qualify within the affordability calculations using the 5.19% rate for a High-Ratio Mortgage or the greater of the Qualifying Benchmark Rate or your Contract Rate Plus 2% if you are seeking a conventional mortgage. A conventional mortgage is when you are financing 80% or less of the propertys approved value. It is becoming more and more difficult for Canadians to qualify for a Prime Mortgage and this is why the Mortgage and Real Estate Industries are continuing to petition the Federal Government to change the Mortgage Qualifying requirements. Canadians may qualify for their mortgage when using the actual mortgage contract rate but are turned away once the Qualifying Benchmark Rate is used.
When the Banks tell you NO; What do you do then?
There is a crack in the Banks, Credit Unions, Trust and Insurance Companies so Canadians need to be aware of what other options are out there when they decline your mortgage request. Most of these lenders do not offer the ability to seek alternative types of financing but Licensed Mortgage Professions most certainly do. A Licensed Mortgage Professional has access to numerous other lenders who make up the Alternative Mortgage Market, also known as B Lending. These lenders offer much more flexibility with their clients and the qualifying requirements to get Canadians into their Dream Home, Buy that rental property or use their existing equity to consolidate debt, do a renovation among other things where a mortgage is needed. Alternative Mortgage Lending offers numerous benefits to Canadians so they can secure their desired financing. Such examples are:
Expanded Debt Service Ratios
Willingness to accommodate damaged credit history and lower credit scores
Ability to accommodate a wider variety of income forms (BFS, Tips, Commission, etc)
Naturally, these alternative type of lenders are working with higher risk type of financing so they quite often charge a fee for the mortgage. This also exists with the broker you are working with. Alternative Lending can involve more work to complete the mortgage, a different skill set is required from the broker and there are usually more requirements needed by the lender such as an appraisal. Though the rates are not discounted, Alternative Lenders tend to charge interest that is based around their posted interest rates and their assessment of the risk the mortgage may bring. Many of these aspects can be discussed prior to your broker submitting your mortgage application and is always disclosed upfront with the Conditional Mortgage Approval your broker receives from the lender.
There are times when Alternative Lenders cannot fill the void left by the Prime Lenders saying No and a mortgage broker, once again, can access the Private Mortgage Markets to find a different type of lender who will fulfill the mortgage request.
The key to maximizing the efficiency of your time, money and energy, is to connect with a Licensed Mortgage Professional right out of the gate so that they can properly assess your financial position and provide the correct feedback on what lender market you will fit in and explain the applicable expectations and overview of that market. Taking this step is the best one for any Canadian as the mortgage professional is the expert in the field with access to ALL three mortgage markets that the banks, credit unions, trust companies and insurance companies rarely have the ability to offer. Now, not all Licensed Mortgage Professionals offer or are properly versed in the Alternative and Private Mortgage Markets so ensure you connect with one that is as it can certainly save you time and money.
It continues to be tough out there to secure mortgage financing in the Prime Market so make sure you have a Plan B in place or know where to explore it if you need one. There are numerous options still available if Prime Lenders have said NO to your mortgage financing.
About The Author
Chris Stewart has worked in the Financial Services Industry for over 25 years and has been a License Mortgage Professional for over 16 years where he has gained extensive and dynamic experience in mortgage brokering. Chris has trained mortgage brokers in the Alternative and Private Markets and offers his clients the best knowledge and experience to achieve their best Plan B options.
Record December caps record year for Canadian home sales
Statistics released today by the Canadian Real Estate Association (CREA) show national home sales set another all-time record in December 2020.
Home sales recorded over Canadian MLS Systems jumped by 7.2% between November and December to set another new all-time record.
Seasonally adjusted activity was running at an annualized pace of 714,516 units in December 2020 the first time on record that monthly sales at seasonally adjusted annual rates have ever topped the 700,000 mark.
The month-over-month increase in national sales activity from November to December was driven by gains of more than 20% in the Greater Toronto Area (GTA) and Greater Vancouver.
Actual (not seasonally adjusted) sales activity posted a 47.2% y-o-y gain in December the largest year-over-year increase in monthly sales in 11 years. It was a new record for the month of December by a margin of more than 12,000 transactions. For the sixth straight month, sales activity was up in almost all Canadian housing markets compared to the same month in 2019.
For 2020 as a whole, some 551,392 homes traded hands over Canadian MLS Systems a new annual record. This is an increase of 12.6% from 2019 and stood 2.3% above the previous record set back in 2016.
Mortgage Deferral Agreements and Their Impact
CMHCs Fall 2020 Residential Mortgage Industry Dashboard discusses mortgage deferral agreements and their impact.
At the end of the second quarter, credit unions, mortgage finance companies (MFCs) and mortgage investment entities (MIEs) have allowed mortgage deferral agreements for about 6%, 7% and 7% of their respective residential mortgage portfolios.
Chartered banks have allowed 16% of mortgages to go into deferral since the beginning of the pandemic. Of these, close to 2 out of 3 borrowers had resumed payments on their mortgages at the end of the third quarter of 2020. In the coming months, we could see higher delinquency rates if some borrowers are unable to resume their payments; these mortgages will have to be booked as arrears.
These deferral agreements have affected financial institutions cash flows, with reductions of:
4% in scheduled mortgage payments
3% in non-scheduled payments (accelerated monthly payments and lump-sum payments)
While remaining at low levels, mortgages in arrears (90 or more days delinquent) have increased slightly between the first and second quarters of 2020 from:
0.24% to 0.26%, on average, for chartered banks
0.23% to 0.25%, on average, for non-bank mortgage lenders
We also observe an increase in early-stage delinquencies (31 to 59 days and 60 to 89 days), which suggests that arrears could continue on an upward trend.