28 Apr

Important Announcement! CMHC makes changes to their mortgage insurance programs.

General

Posted by: Anne Martin

On April 25, 2014, CMHC announced that effective May 30, 2014 it will discontinue insuring Mortgage applications for “Second Homes and Business for Self “Declared/Stated” Income Programs

A second home as defined by CMHC is a second home that is owner occupied either by the borrower/co-borrower or a relative of the borrower/co borrower where rent is NOT applicable.  This is not to be considered for any property that is a rental. 

Examples include – vacation homes, housing for children to reside in while studying away from home, owners who live in more than one location, etc.

Home owners will be restricted to having only one insured property. 

As of today, April 28, 2014 Genworth and Canada Guaranty have made NO similar announcements. Their programs still apply.

Without these products your  purchasing power may change.  You will either have to qualify for insurance through Genworth and/or Canada Guaranty who may have different rules than CMHC. Purchases with down payments of 20% or more are not usually affected.  Refinances are maximum 80% of the value of the property, therefore, this new policy is not expected to apply.

Many purchasers may have to apply to alternative lenders for their mortgage financing.   Contact a mortgage professional to discuss your options.

Discontinuation of CMHC Self-Employed Without Traditional Third Party Validation of Income

CMHC insured mortgages will no longer be available to clients who require opportunity to “State” their income and/or use non-traditional methods for proof of income

Samples of traditional third party validation of income includes;

  • copies of their Canada Revenue Agency (CRA) Notice of Assessment
  • audited financial statements
  • or review engagement financial statements prepared by a practicing accountant for the previous two year period.

Questions –

1) Will self-employed borrowers still be eligible to access CMHC mortgage loan insurance?

CMHC will continue to offer all programs to self employed borrowers with traditional proof of income as long as they only have one 1-4 unit mortgage insured property.

2) What type of documentation is required for self-employed borrowers to support and verify their income when seeking CMHC-insured financing?

For the majority of self-employed borrowers, income validation is readily available.   See samples above.

3) What are some examples of supporting documentation for confirming the length of business operation for prospective borrowers who are self-employed?

Examples of supporting documentation for confirming the length of business operation include:

  • income tax returns supported by the CRA Notice of Assessment,
  • business credit reports,
  • GST returns
  • active bank accounts,
  • financial statements accompanied by a Review Engagement Report signed by a practicing accountant,
  • audited financial statements,
  • business license or articles of incorporation.   

 Requirements may vary according to client application and lender requirements.

4) A self-employed borrower without traditional third party validation of income is purchasing a home/having a home built and will require a CMHC-insured mortgage. The closing date/progress advance draws will only occur on or after May 30, 2014. Will the discontinuation of this product impact this borrower?

As long as the request for mortgage loan insurance is received by CMHC prior to May 30, 2014, the application will be subject to the existing product offering, terms and conditions, even if the closing date/progress draws occur on or after May 30, 2014.

5) Does CMHC plan to make changes to the Self-employed With Traditional Third Party Validation of Income product?

CMHC is not making any changes to the self-employed product where borrowers are able to provide traditional third party validation of their income.

6) If a loan application for a self-employed borrower without traditional third party validation of income is submitted to CMHC prior to May 30, 2014 and then re-submitted with changes on or after May 30, 2014, will the application still be eligible for CMHC mortgage loan insurance?

As long as the request for mortgage loan insurance is received by CMHC prior to May 30, 2014, the application will be subject to the existing terms and conditions of CMHC’s Self-Employed Without Third Party Validation of Income even if the application is re-submitted on or after May 30, 2014.

Click here for a video provided by Genworth about insured mortgages for self employed individuals WITHOUT traditional forms of income varification.

Second Home Product Questions and Answers

1) Does this mean that a borrower/co-borrower who wishes to purchase a property for a child to pursue studies in another location will no longer be able to access CMHC-insured financing?

A borrower/co-borrower is still able to access CMHC-insured financing provided that they do not have an existing CMHC-insured homeowner loan in place.

2) Does this mean that a borrower will no longer be able to act as a co-borrower on another application?

CMHC will now limit the availability of homeowner mortgage loan insurance to only one property (1-4 units) per borrower/co-borrower at any given time. A borrower may be a co-borrower as long as they don’t have another CMHC insured homeowner loan in place.

3) Will all borrowers be subject to the restriction of a maximum of one CMHC-insured homeowner property (1-4 units)?

Yes, CMHC will now limit the availability of homeowner mortgage loan insurance to only one property (1-4 units) per borrower/co-borrower at any given time.

4) Does this mean that a borrower/co-borrower has to occupy the unit being financed?

At initiation, the property that secures a CMHC-insured loan must be intended for occupancy at some point during the year by a borrower; or a relative of the borrower on a rent-free basis. Lenders must confirm owner occupancy and maintain the confirmation on file.

5) Does this restriction apply to guarantors?

No, guarantors are not restricted however lenders must follow guarantor policies. The guarantor’s/covenantor’s income must not be used for the purpose of satisfying CMHC’s borrower qualification criteria unless the guarantor/covenantor occupies the home and is the spouse or common-law partner of the borrower.

6) If a borrower is temporarily transferred to another location for work purposes and wishes to purchase another property in their temporary location while renting out their current family home?

The mobile workforce is still able to access CMHC-insured financing provided that they do not have an existing CMHC-insured homeowner loan in place. CMHC will now limit the availability of Protected For Distribution to Industry Partners homeowner mortgage loan insurance to only one property (1-4 units) per borrower/co-borrower at any given time.

7) How will this affect First Nations marketing second home properties on designated leasehold lands on-reserve?

A borrower(s) is still able to access CMHC-insured financing provided that they do not have an existing CMHC-insured homeowner loan in place. Financing can also be provided by lenders on a conventional basis, with a loan-to-value less than 80%. It is important to note that any vacation home development will be treated in exactly the same manner throughout the country.

8) Will CMHC accept financing overlap in situations where the closing date of the home being purchased is before the closing date of the home being sold?

Overlap of CMHC-insured financing (i.e. bridge financing) will be permitted when there is a firm purchase and sale agreement for the existing property. Other exceptions that may arise due to specific circumstances may be considered on an exception basis.

9) A borrower is purchasing a second home/having a second home built and will require a CMHC-insured mortgage. The closing date will only occur on or after May 30, 2014. Will the discontinuation of this product impact this borrower?

As long as the request for mortgage loan insurance is received by CMHC prior to May 30, 2014, the application will be subject to the existing product offering, terms and conditions, even if the closing date/progress draws occur on or after May 30, 2014.

10) A borrower requires CMHC-insured financing for a rental property they wish to purchase. Will the discontinuation of CMHC Second Home impact this borrower?

Borrowers with one CMHC-insured homeowner loan (1-4 units) will still have access to CMHC-insured financing to purchase rental properties under CMHC’s Rental Loan products.

11) When is a property considered a rental property and not eligible for homeowner mortgage loan insurance?

A property is considered to be a rental property where at initiation:

• neither the borrower or a relative who is not paying rent, will occupy the property (or one unit of the property) at some point each year; or

• the property contains 5 or more units.

Any of the above conditions will require the application for mortgage loan insurance to be submitted under CMHC’s Rental Mortgage Loan Insurance products. Lenders will be expected to verify occupancy of properties and purchases may have to be provided via rental programs instead.  Most of these programs require minimum 20% down payment.

Genworth provides insured mortgage options for individuals purchasing second homes.  Click here for the details.

 

For further information regarding CMHC changes, please click here.

 

28 Apr

Bank of Canada’s Stephen Poloz says interest rate to remain low for years to come.

General

Posted by: Anne Martin

 
 
Anne Martin Mortgage Agent | FSCO # M10002257
705-720-1001 1-800-500-1841    anne@ndlc.ca | www.barriemortgagelocators.com
39 Collier Street, Ste 300 Barrie ON L4M 1G5

  

  Neighbourhood Dominion Lending Centres |  FSCO 11764  Independently Owned & Operated
 
Friday, April 25, 2014
Market Update Bond rates have fallen slightly the last 2 weeks. No changes in long or short term rates.  Long term rates remain in the 2.99-3.19% range with variable rate mortgages in the 2.4-2.6% range.  The new high ratio insurance premiums become effective on May 1st. Most lenders are creating cut off dates of April 28th to ensure we can get the current premiums.
The article below is commenting on rates staying low until 2016. Worth reading it.
If your mortgage is renewing in the next 6 months or you are thinking of refinancing, I strongly recommend you start the process now.
If you have a variable rate of any more than prime +.25 or a fixed rate of 4.25% or more, we should explore the merits of refinancing to a lower rate.  It may result in savings of thousands of dollars and a longer term at today’s record low rates.        Contact me for a free, no obligation review. Spending a few minutes could save you thousands of dollars.
Bank prime is 3.00%
Next Bank of Canada update is June 4th
P.S. If you, your family, or co-workers require guidance on current market trends, please call me, I am always available to help.

…Anne

 

Bank of Canada’s Stephen Poloz says interest rates to remain low for years to come Canadian Press | April 24, 2014 | Last Updated: Apr 24 3:28 PM ET OTTAWA — Canadians can expect to enjoy relatively cheap borrowing costs for some time to come — perhaps years — even after the economy returns to full capacity and the Bank of Canada starts hiking interest rates, bank governor Stephen Poloz said Thursday.
The central banker told a luncheon in Saskatoon that the economy has room to grow before it can be considered to be firing on all cylinders, but even when it does — likely sometime in early 2016 — Canadians shouldn’t expect a sudden increase in interest rates to fight inflation.
Read More…

 


CONGRATULATIONS ! to the first winners of $1000

Click to find out who won – Was it You?


To enter, close a mortgage through Neighbourhood Dominion Lending Centres (including switches and refinancing) OR refer others to do the same. For each deal that closes, you and your referral will receive an entry ballot! The more referrals you send, the better your chances of winning!
Call me for more details.
Contest closes November 20th, 2014 at midnight EST.
Contest Rules and Regulations

 Historical Interest Rate Graphs   
Below you will find a feature which will give you current interest rate trends. It  can also be accessed on our web site. I hope you and your clients find it useful
Click here to  access rate graphs 

My Commitment to You 
  • Constant update of Market Conditions
  • Innovative Mortgage Products
  • Value Added Services
  • Unbiased Advice
  • Innovative Mortgage Strategies and NOT just Order Taking
17 Apr

Bank of Canada maintains overnight rate, prime still at 3%. Mortgage Market Update April 17, 2014

General

Posted by: Anne Martin


 


Anne Martin
Mortgage Agent | FSCO # M10002257

705-720-1001
1-800-500-1841 
 
anne@ndlc.ca | www.barriemortgagelocators.com

39 Collier Street, Ste 300 Barrie ON L4M 1G5

  

  Neighbourhood Dominion Lending Centres |  FSCO 11764  Independently Owned & Operated

Thursday, April 17, 2014
Market Update

Bank of Canada has maintained the overnight rate, keeping bank prime at 3%. 

Summary:

  • “Inflation in Canada remains low. Core inflation is expected to stay well below 2% this year due to the effects of economic slack and heightened retail competition”
  • “Global economic expansion is expected to strengthen over the next three years as headwinds that have been restraining activity dissipate”
  • Europe’s economy is showing growth but inflation is still considered too low. This view of a recovery could stem from the situation in Russia-Ukraine
  • “Bank of Canada continues to see a gradual strengthening in the fundamental driver of growth and inflation in Canada”


Next announcement is scheduled for June 4th 

P.S. If you, your family, or co-workers require guidance on current market trends, please call us, I am always available to help.

…Anne

Bank of Canada maintains overnight rate target at 1 per cent

16 April 2014
Contact: Media Relations 613 782-8782

OTTAWA — 

The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

Inflation in Canada remains low. Core inflation is expected to stay well below 2 per cent this year due to the effects of economic slack and heightened retail competition, and these effects will persist until early 2016. However, higher consumer energy prices and the lower Canadian dollar will exert temporary upward pressure on total CPI inflation, pushing it closer to the 2 per cent target in the coming quarters. We expect total CPI inflation will remain close to target throughout the projection, even as upward pressure from energy prices dissipates, because the impact of retail competition will gradually fade and excess capacity will be absorbed.

Read More


 Historical Interest Rate Graphs   

Below you will find a feature which will give you current interest rate trends. It  can also be accessed on our web site. I hope you and your clients find it useful

Click here to  access rate graphs 


Our Commitment to You 

  • Constant update of Market Conditions
  • Innovative Mortgage Products
  • Value Added Services
  • Unbiased Advice
  • Innovative Mortgage Strategies and NOT just Order Taking
6 Apr

Bank of Canada rate hike to lag behind US. Mortgage Market Update April 4, 2014

General

Posted by: Anne Martin



 


Anne Martin
Mortgage Agent | FSCO # M10002257

705-720-1001
1-800-500-1841 
 
anne@ndlc.ca | www.barriemortgagelocators.com

39 Collier Street, Ste 300 Barrie ON L4M 1G5

  

  Neighbourhood Dominion Lending Centres |  FSCO 11764  Independently Owned & Operated

Friday, April 4, 2014
Market Update

The past few weeks have seen all kinds of press on the Bank of Montreal 2.99% rate special which currently ends in a few weeks. It comes with several restrictive clauses, great  caution is advised here for sure. Call me if you have any questions on this as I have the exact wording on it.

Bonds have been inching upwards the past week. If this trend continues, we will see some rate hikes in the fixed rates.

Current 5 year rates are in the 2.95%-3.14% range. Variable rates are in the 2.35-2.55% range.

If your mortgage is renewing in the next 6 months or you are thinking of refinancing, I strongly recommend you start the process now.

If you have a variable rate of any more than prime +.25 or a fixed rate of 4.25% or more, we should explore the merits of refinancing to a lower rate.  It may result in savings of thousands of dollars and a longer term at today’s record low rates.     
 
Contact me for a free, no obligation review. Spending a few minutes could save you thousands of dollars.

Bank prime is 3.00%

P.S. If you, your family, or co-workers require guidance on current market trends, please call me, I am always available to help.

The next meeting of the Bank of Canada is April 16, 2014

…Anne

 

Bank of Canada expected to lag Fed in rate hike timing and pace

Jonathan Ratner | April 1, 2014 8:10 AM ET

The Bank of Canada could lag the U.S. Federal Reserve in starting to raise rates, but it may also lag behind in terms of the pace of hikes during the upcoming cycle, says a Scotiabank outlook.

Scotiabank economists Derek Holt and Dov Zigler anticipate an end to Fed bond purchases by October 2014, with a higher fed funds rate coming by Q2 2015.

Read More…


To enter, close a mortgage through Neighbourhood Dominion Lending Centres (including switches and refinancing) OR refer others to do the same. For each deal that closes, you and your referral will receive an entry ballot! The more referrals you send, the better your chances of winning!

Call me for more details.

Contest closes November 20th, 2014 at midnight EST.

Contest Rules and Regulations


 Historical Interest Rate Graphs   

Below you will find a feature which will give you current interest rate trends. It  can also be accessed on our web site. I hope you and your clients find it useful

Click here to  access rate graphs 


My Commitment to You 

  • Constant update of Market Conditions
  • Innovative Mortgage Products
  • Value Added Services
  • Unbiased Advice
  • Innovative Mortgage Strategies and NOT just Order Taking