So 2016 was an exciting year in the mortgage world! The problem is that we mortgage professionals really hate it when things get exciting in our world. Between the economy and the federally mandated mortgage rule changes and their ensuing fallout, it is now more important than ever to get a solid pre-approval in place. I am not just speaking to first time home owners either! Before you list your current home or refinance your mortgage or consider buying a rental, you need to make sure that you qualify under the new mortgage rules.

The biggest change by far was the increase to the mortgage qualifying rate. Basically, no matter which term you are selecting you will have to qualify at the Bank of Canada posted rate which is currently 4.64%. The mortgage rate you are given will be considerably less than this and will be based on whichever term you choose. The rationale is that there is no way rates were going to stay at 2.39% and all of a sudden a lot of people could be hit with a significant mortgage payment increases which could mean increased foreclosures. When you remember that our federal government is actually financially backing those mortgages through the mortgage insurers, they had a vested interest in keeping the housing market secure.

So the things you need to know:

1. Rates have climbed since the rule changes were announced, so if a new home is in your future get a rate hold in place so you are protected against further increases. Most are good for 120 days.

2. Make sure they are checking your credit and not just seeing how much you are qualified for based on your income. Can you imagine selling your home only to be told that you do not qualify for the financing on the next because of something on your credit bureau? It has happened, I assure you.

3. Given the variety of ways in which we all get paid, you also need to make sure your pre-approval is solid given your situation. For example, the mortgage lenders require a 2 year history on all variable income. That means if your income is commission, bonuses, overtime or shift differential then you will need a 2 year history of it before it can be used for the mortgage qualification.

4. Porting is an area which is slightly misunderstood. You will have to qualify for the mortgage under the new rules even if you are just moving the mortgage from A to B. Please refer back to the previous horror story of the people who had sold and then could not buy a new home.

5. Ironically, the changes now mean that if you are refinancing your home, there is a possibility that you will have a higher mortgage rate than someone putting 5% down. This is because the 5% down mortgage is insured while yours with the significant amount of equity is not making it a higher risk for the bank. If you are considering a refi you may want to do it sooner rather than later given the rate increases.

6. Rental properties have been heavily hit by the changes. Our economy means that fewer lenders are willing to consider these mortgages to start with and those that still are have upped the ante. Some have increased the minimum down to 35% from 20%. Others require a very strong net worth in liquid assets. If you have multiple properties make sure they are reporting on your taxes.

So that’s about that. A solid pre-approval from a qualified mortgage professional is a very good peace of mind strategy for both the new home buyer and those veteran buyers. When you’re ready to talk or if you need more information, please contact me.

Over the last few years, we have seen many retired Canadians outliving their retirement savings and requiring a financial solution to help them live the rest of their retirement. In the media alone, there is a constant outpouring of articles relating to retirement planning, preparing enough savings for retirement, as well as numerous articles around when to tap into your CPP. For many retirees and those approaching their retirement, these articles are a reminder of how to prepare and what to anticipate. However, Canadians continue to struggle with their finances in their retirement years.

Many Canadians are entering their retirement years with debt and underestimating the amount they need to save for retirement. In a recent national survey of Canadian homeowners, 40+, that we commissioned, we found there is a large gap between the lifestyle expectations of those Canadians studied and the reality. In fact, a startling 69% of Canadians researched expressed confidence that they have sufficient funds to retire, however 43% of retirees studied have debt including a whopping 35% of Canadians 75+. While 78% claim to have savings and investments, a full 40% have less saved than $100,000. That means, the majority (53%) of Canadian homeowners 40+ have either no or less than $100,000 in savings to carry them through retirement!

The study further goes on to show that a significant portion (82%) of those studied, reported that having the ability to stay in their homes during retirement is very important and 69% value their home equity as an important asset in their retirement plans.

This study also enabled us to question the familiarity of the reverse mortgage product. More than half of the respondents claimed that they were familiar with reverse mortgages, and among those who would consider a reverse mortgage, 50% of them said that the main reason for considering a reverse mortgage is to supplement their income.

Many respondents wanted reassurance that they would continue to own their own home without ownership being transferred to a third party. (yes-customers continue to own their own home!) The respondents also felt more at ease knowing that banks and other secure financial institutions offered the CHIP Reverse Mortgage (they do!) and if the solution was recommended by financial professionals (it is!).

This study is a reminder of how important it is to continue to raise awareness to the reverse mortgage product. Canadians prefer to age in place, are carrying debt and have inadequate savings, but many are directed to solutions that don’t give them the opportunity to live in their homes without the need for monthly mortgage payments. Reverse mortgages are a smart and comprehensible solution for Canadians planning their retirement. To learn more, contact me at your earliest convenience.

Contact me now for the best mortgage rates and conditions – interest rates change frequently so don’t delay!

Contactez-moi dès maintenant pour les meilleurs taux et conditions hypothécaires – les taux d’intérêt changent souvent alors faites vite !