This sort of thing makes me REALLY REALLY mad. Today morning I woke up and glanced over the Report on Business by the Globe and Mail. Not surprisingly, my arch-nemesis (just kidding, sort of) Rob Carrick writes another article about how hard it is for an average person to save a down payment in Toronto. He touts his new “down payment savings calculator” (which I won’t even link to because it’s rubbish) and shows everyone how the average person who makes $45,000 per year will take SIX YEARS to save for an average house in Toronto.
Why does this make me so mad?
Rob forgets to tell his readers that he failed at basic mortgage math 101. Here’s why.
On average the property price in Toronto is $623,000. Note I said property, not house. Property means house, condo, townhouse, etc., so to get a key to your own…
The body that oversees mortgage financing, OSFI, isn’t happy with what is going on and wants to ensure that lenders are following the rules as set out in their guidelines released in the last 2 years called B20 and B21. Those sound like world-war 2 bombers but they are not - they were the framework for mortgage underwriting and what each bank & lender is supposed to do when processing a loan request.
Note I said, “supposed to do”.
Most of us heard about the “student” who bought a $24M mansion in Van-city and took out a $9M+ CIBC mortgage, here on a student visa, right? Well that’s not what the intention of the B20 and B21 rules was, and now it appears that it’s causing OSFI to cast a wider net and look at five major underwriting components:
Income verification - OSFI is concerned too…
So, my mortgage was up for renewal and I knew I wanted to open a new account at one of our big five banks (for various reasons including that my RRSP loan was there, I wanted to have everything under one umbrella). I’m a completely new customer to this bank except for the one RRSP loan and thought it would be a great process to go through the mortgage process from a customer’s point of view.
What a mistake.
I’m not trumping going through a mortgage broker because believe me, I understand there are times where going to the bank may make the most sense. If my experience is anything like what other people are going through, though, then I have no idea how people actually do this without pulling their hair out.
It has been eight business days counting today that my approval hasn’t materialized. Eight. Business.…
My mentor, tutor, and broker John Bargis from Mortgage Edge brought to light today a differentiator that is clearly emerging in the mortgage industry.
Do you process or service your client?
Are you, as a client, looking to be serviced or just to be processed?
Here’s what I mean exactly illustrated by a real-life example.
I have these great clients who have been engaging with me on every facet since January. We have developed all sorts of different scenarios for them: Keep condo, sell condo, refi condo, buy a house, max down payment, minimum down payment, amortization scenarios, everything under the sun. This is where I present to my clients the true value of working with someone who participates in the service-type of mortgage brokering. I not only love what I do but I know what I do very well and come up with every possible angle, down-fall, or…
Today’s post focuses on a little-known mortgage feature that some lenders do not have, but that can bite you in the rear at the most inopportune time: When it’s time to move your mortgage. We’re talking about blending vs blending-and-extending your mortgage when you’re moving up, across or even down the property ladder. What do I mean by this exactly? Easy:
When you sell your property and buy another one, and if the math makes sense to stay with your bank or lender, you have the option to transfer your mortgage over. Hidden deep deep down in the disclosure documents you received when you first bought your house and took out a loan was the option to blend OR blend-and-extend. Not every lender has both options and here’s why it can get rather messy:
If you’re breaking in the middle of a term (let’s say a 5 year), and moving,…
Today’s post will discuss what to do if you get married and/or have a different legal name vs your “home country” name. This is crucial for maintaining your good credit rating because, borrowing is all based on your beacon score. No beacon? No loan! This is also an example how I #createvalue for my borrowers, by going the extra step required to make their borrowing roadmap without any detours.
Gary and Angela called me to get pre-approved for a mortgage. We discussed things in detail from a high-level point of view prior to pulling their credit. Once they were satisfied with the potential numbers, we did a credit inquiry. Lo and behold, Angela’s credit showed up as the dreaded BEACON REJECT - which is credit-report-slang for “Hey! You have no active/actual credit!”. This was a surprise to everyone since Angela showed me three credit cards she had in her possession…
The Globe and Mail has been selling a lot of newspapers lately with their deep-down investigative journalism about the Vancouver housing market lately. Included in that is this weekend’s piece about The Real Estate Technique Fuelling Vancouver’s Housing Market which, to me, read a lot like sour grapes by sellers of already-vastly-overpriced-homes. A bit of greed, too. Let me not suggest that what is happening in Vancouver right now in light of these findings (and previous ones) is fair or equitable to the average Vancouver-ite. However, reading the reaction of some of the homeowners, I can’t help but think they should only look in the mirror and “blame” themselves for making “only” $4.843M in tax-free money on their home in 29 years. Broken down, that’s like making $151, 172 PER YEAR of tax-free money. So, where’s the beef?
The beef is…
Ok, so it’s been a few years and you’ve been busy hammering away at your mortgage principal and now it’s time to renew your mortgage. This post will share some myths, insights, and ideas I have when discussing renewals with clients.
First of all, renewal time is your best chance at getting the best deal without any cost. Whether you went fixed or variable, short- or long-term amortization, the lender you’re with now knows full well you may not shop your deal around therefore they will offer you an average and mediocre rate. If you fail to sign up and do anything about it, they’ll offer you an even worse rate: the dreaded convertible option. This means they will fix your mortgage, apply high penalties to leave, but give you the option of picking another term with them at anytime, without cost. Let’s face it: lenders salivate at offering high-rate…
The new Finance Minister announced changes to the down payment rules we all knew were coming from last week’s blog post. Simply put, they are the lowest-hanging fruit for the Government to use in order to cool things. Let’s face it - things are out of control in Toronto specifically. If you’re a buyer or buying Realtor you know how insane things are. If you’re a listing agent, you know how insane things are. If you’re a lender or mortgage broker, you know how insane things are. So why not change things up a little bit to cool things off?
This is the sixth version of mortgage rule changes we have seen in the past 10 years and like the previous five, this one will do little to cool things. It will certainly help a little bit, especially on the higher-end, but it is the most gradual and relaxed rule…
There has been a lot of speculation about a potential increase to down payment rules from 5% to 10%, especially with the Vancouver and Toronto housing markets continuing their incredible run.
Both Bloomberg and Canadian Mortgage Trends reported today these potential moves brought on by the Liberal Government. “As many as 115,000 buyers across Canada may not afford a 10% down payment”. There is also talk of a sliding scale policy where the 5% down payment would still work for homes under $500,000, 7% being required for $500,001 and $700,000, and 10% on anything over $700,000.
The worst part? If this is to happen expect it to happen fast, without warning, and potentially without much heads up.
The second worst part? This would cause huge damage to a very weak market outside of Toronto and Vancouver as is evident by the charts below. Our prices are…