At the beginning of 2018, new federal guidelines came into effect requiring all federally regulated banks to vet borrowers’ applications using a minimum qualifying rate equal to the greater of the Bank of Canada’s five-year benchmark rate, or their contractual rate, + two percentage points.
These new rules can seriously stifle a new mortgage application! But there is a positive as well—at least you’ll be more confident that should interest rates increase, you’ll know that you can still afford those payments.
If you don’t qualify for a mortgage with your favourite bank, this does not mean you’re out of the game. After all, in some markets mortgage payments would be cheaper than rent, so it makes financial sense for you to explore your options and keep trying.
So, what are your next steps? Well, don’t give up would be my advice. Explore your options!
First, speak with a mortgage broker (if you haven’t already). They can open the door to otherwise unexplored opportunities. Brokers have access to major banks, credit unions and private lenders. They act as a middleman to find you the best rates and terms available and can apply for loans on your behalf.
DID YOU KNOW? “Credit unions are not-for-profit financial cooperatives, whose earnings are paid back to members in the form of higher savings rates and lower loan rates. Banks are for-profit corporations, with declared earnings paid to stockholders only.” (pscu.org)
AND federal banks are the only institutions required by law to apply the new stress test to mortgage applications—credit unions and other lenders do not (though some are voluntarily complying).
You can shop for a mortgage as you would with any other major investment, and you should take time to find the right fit for you. After all, a home is the biggest purchase you are ever likely to make, so you should be confident about who is on your team!
Visit your local banks, credit unions, trust companies, mortgage loan companies and building societies. Check online mortgage offerors as well (or leave it up to your mortgage broker!).
And there are as many types of mortgages as there are places to get them!
Speaking with a representative at your financial institution or an investment professional will help get you on the right track. They can guide you to make the best financial choices for you and your lifestyle.
MORTGAGE TIP! Ask about pre-payment or early payment options on your mortgage. Sometimes paying down a mortgage faster with any extra cash you have may save you more money than if you’d invested it!
Need Money For a Down Payment? A little-known strategy that might just work for you!
Need help shopping for that perfect home? CONTACT ME TODAY!