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Renewing Your Mortgage
What to consider as you mortgage renewal date gets closer

The end of your mortgage term is a great time to pause and take a good look at your financial situation. I will outline some of the key points you should consider at this time below: -is there a need to access the equity in your home to pay off debts or invest? This is a good time to increase the mortgage to facilitate such things as the existing mortgage term does not have to be “broken” which incurs penalties to do so. We can take a mortgage to 80% of the current value of the home. This amount less the existing mortgage balance is the amount of “equity” you can take out of your home. -do you have extra

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Stress-Test Rate Drops After a Year of No Change
The benchmark posted 5-year fixed rate, which is used for stress-testing Canadian mortgages, fell yesterday in its first move since May 2018.

The rate change came as a surprise to most financial observers, since it’s based on the mode average of the Big 6 banks’ posted 5-year fixed rates. And there have been no changes among the big banks’ 5-year posted rates since June 21. As reported by biggerpiggybank.com, the Bank of Canada explained today’s move as follows: “There are currently two modes at equal distance from the simple 6-bank average. Therefore, the Bank would use their assets booked in CAD to determine the mode. We use the latest M4 return data released on OSFI’s website to do so. To obtain the value of assets booked in CAD, simply do the subtraction of total assets in foreign currency from total assets in total

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Flexible lending solutions for business-for-self individuals

Your home is more than just the place you hang your hat at the end of the day—in many cases, it’s one of your most valuable assets. And yet, when it comes to accessing the equity in your property for projects like home improvements or to finance your personal business ventures, you may find yourself among the many homeowners who are unable to do so because of the rigid lending constraints imposed by traditional financial institutions. This is especially true when it comes to lending for business-for-self individuals and those whose occupations provide a variable income that falls outside of typical payroll arrangements. But that doesn’t make sense! If a large share of your net worth is tied up in

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The latest news on debt and financial distress in Canada
retructuring debt by consolidation could be a winning strategy

A significant number of Canadian households reported being late on a debt payment or missing it entirely, according to a new report from Statistics Canada. The 2016 data from the agency’s Survey of Financial Security shows that more than 1-in-10 Canadians (11%) with some form of debt reported skipping or making a late non-mortgage payment. According to StatsCan, those more likely to miss or skip a debt payment include: Those aged 55 to 64 years old (8.1% missed payments compared to 3.9% of 24-to-44-year-olds and 4.2% of 45-to-54-year-olds.) Those in the lowest quintile of income groups (6.8% missed payments compared to 2.1% of those in the highest quintile) Those living in the Prairies (6.8% missed payments compared to 3.2% of

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CMHC’s First Time Buyer Program
What you need to know

CMHC ( Canada Mortgage and Housing Corporation ) officially announced yesterday to release details of its First-Time Buyer Incentive ( FTHBI ). Here is a Recap: CMHC will contribute 5% of a down payment for the purchase of an existing home or 10% for the purchase of a new build The mortgage must be default insured The applicants’ household income must be less than $120,000 No monthly payments are required, and this amount can be paid back at any time, or upon the sale of the house CMHC shares in both the proportionate gains or losses in home value The insured mortgage plus incentive cannot be more than four times the participants’ household income (roughly a $565,000 maximum purchase price

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Why Canada’s mortgage regulator thinks the stress tests are ‘working’
But house prices continue to climb....so IS IT "WORKING" ??

The federal financial-system regulator responsible for creating Canada’s mortgage stress tests says the rules are “working,” countering repeated calls from the industry for reform. “Since the B-20 revisions were put in place, lenders are approving fewer mortgages for the most highly indebted or over-leveraged borrowers,” reads a statement the Office of the Superintendent of Financial Institutions (OSFI) issued this week. Guideline B-20, which became policy in January 2018, included a so-called stress test for uninsured mortgage applicants. The test requires borrowers with downpayments of 20 percent or more to qualify a rate that is 2 percentage points above their contract rate. To obtain a five-year fixed-rate mortgage at 3 percent, for example, a borrower would have to show they could

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Next Rate Move Will be Lower: CIBC
Some ideas about where rates will go next.

Just months ago, the prospect of an additional Bank of Canada rate hike by the end of 2020 was very much on the table. In recent weeks, however, whispers that the next rate move may in fact be down have been growing louder. In December, Capital Economics said they expected a rate cut before the end of 2019—a call that turned some heads. But now, heavyweights like JPMorgan Chase & Co. and CIBC are adding their voices to those forecasting an impending rate cut rather than a rate hike. JPMorgan Chase has reduced its Canadian growth forecast to 1.5% from 2.25% and expects the BoC to deliver a 25-bps cut at its October rate meeting. Economists at CIBC also expect

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Don’t kill the mortgage stress test
But do modify it...radically

The dreaded “stress test”…. Is it the stress test that is preventing people from buying homes in Canada? Certainly, it has a big impact on affordability but I would argue that the seemingly uncontrollable rising  house prices and/or current level of home prices have much more to do with getting into a new home than does the stress test. The stress test should be modified to take into consideration the current leveling of interest rates; the fact that incomes rise within the 5-year term of a mortgage; and that principal is being paid down prior to the maturity of any mortgage term.  Perhaps these points should lead to a stress test that inputs a rate of 1% over contract vs.

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Down Payment Confirmation
Confirming the source is as important as having the funds available

The time leading up to the closing day on your new home purchase can be very stressful and there are a number of things that must come together before you are handed the keys to your new home. One of these requirements involves your down payment and the verification of the source of your down payment. This is to ensure that borrowed money is not being used for the down payment. This information is required by your lender, as well as, in some cases, insurance providers such as the Canada Housing and Mortgage Corporation (CMHC). Down payment sources fall into one of the following three categories: Down Payment from the Sale of Your Current Home When selling your current home

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New mortgage rules help first time home buyers
The latest Federal Budget has incentives to purchasers

Finally, some relief in the mortgage world. While the winds of change aren’t as forgiving as we would have hoped, they are at least moving in the right direction. The centerpiece of budget is a plan to boost home ownership and help ease the difficulty of obtaining a new mortgage. The new First-Time Home Buyer Incentive, for those with an annual income of $120,000 or less, would provide an interest free loan of up to 5% of the value of an existing property or 10% of a new construction home. The government says the $1.25 billion in financing will help 100,000 Canadians over three years. Another $100 million in financing will be administerd by third party groups, including non-government organizations.

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