28 Jul

RESTRICTIONS ON FOREIGN OWNERSHIP OF REAL ESTATE

General

Posted by: Anne Martin

26 JUL 2016

RESTRICTIONS ON FOREIGN OWNERSHIP OF REAL ESTATE

BC's Tax On Foreign HomebuyersIn a surprise move, British Columbia introduced a new 15 percent property transfer tax on foreign real estate buyers in Vancouver on Monday, action intended to calm soaring prices. The new tax would apply to buyers who are neither Canadian citizens, nor permanent residents. The definition of foreign buyer appears to include international students and temporary foreign workers. The reaction so far has been mixed, but clearly it has raised issues on a number of fronts.

One concern is enforcement. The new tax, which is quite hefty, amounting to $300,000 on a $2 million property, could be difficult to enforce as foreign buyers might circumvent the tax by having Canadian residents buy on their behalf. It is suspected that many foreigners already buy properties through local residents. B.C. said it would introduce measures to prevent foreign buyers from bending the rules and threatened stiff fines – $100,000 for individuals and $200,000 for corporations – for those who don’t comply.

Another issue is effectiveness. Other jurisdictions have introduced measures to limit or reduce foreign real estate investment, but the impact of these measures is uncertain. We don’t know just how price sensitive foreign investors might be. We do have anecdotal evidence that some foreign purchasers have driven up residential real estate prices very rapidly, especially in multiple-bidding situations, with little concern for inherent value. It is doubtful that the new transfer tax, even at 15 percent, will render housing dramatically more affordable in the Greater Vancouver region.

There are foreign-ownership restrictions in other countries. Here are some examples:

Australia

Foreign real estate ownership has long been a hot button Down Under, and the Australian government has gone to great lengths to curb it.  December 1, 2015, the government introduced new Foreign Investment Review Board (FIRB) application fees and a new compliance/penalty regime. The application fees are sizable. It costs $5,000 just for the right to make an offer on a newly constructed home or apartment on a place costing up to $1 million, and $10,000 for each subsequent million-dollar jump in purchase price.

Foreign non-residents are no longer able to own any share of existing real estate properties (unless, in some cases, the existing home will be their primary residence, where rental is prohibited) and they must seek approval from the FIRB to buy new dwellings or vacant land for development. Foreign investors who break the rules can face up to three years in jail or a fine of $127,500. Individual real estate agents who help a foreign buyer circumvent the system can be fined up to $42,500, while companies could be hit with a $212,500 fine.

United Kingdom

In 2014 a study revealed that 50,000 homes in London were vacant, while Londoners were struggling to find affordable housing. According to CBC Business News Senior Writer, Lucas Powers, U.K. citizens have long been concerned about ballooning home prices, especially in London. Lawmakers there have responded with a large capital gains tax.  In Britain, the tax is between 18 and 28 percent on the capital gains from residential real estate that is not a primary residence. Foreign non-resident owners were not subject to this tax. In a effort to level the playing field, as of April 2015, the government now takes up to 28 percent at the point of sale on foreign-owned residential property. In June of 2015 they saw one of the largest declines in UK housing prices in months, and of course, Brexit is currently reeking havoc on prices as well.

The capital gains tax for overseas owners was introduced shortly after the government took steps to cool sales of luxury homes by boosting the so-called Stamp Duty — a progressive tax paid on most residential properties in the U.K. — for homes valued at more than 1 million pounds.

Singapore has a similar system of an 18 percent property sales tax and mandatory government approval for foreign purchases of real estate.

Switzerland

It is even more difficult for non-resident foreigners to buy residential property in Switzerland. Each year the government assigns quotas to each of the country’s 26 cantons. If approved, foreigners must use their Swiss dwelling personally–not for rental.  In addition, each canton have authority to impose additional far-reaching restrictions.

China

Foreigners are allowed to purchase only one property for their own personal use, after having spent one year in the country. After that, if you become a permanent resident, you’re allowed to purchase one additional property for personal use.

Hong Kong

Hong Kong, though part of China, has its own real estate regime. HK has the most expensive real estate in the world, with median prices at almost 20 times the median income of its citizens. For Vancouver, that multiple is about 11 or 12 times (and rising) and for Toronto, it is roughly 7 or 8 times. The HK government has responded with a 15 percent surcharge on homes purchased by non-permanent residents. A tax of 10-20% is also levied on anyone that sells a property less than three years after purchasing, effectively preventing flipping.  In 2012, the city established areas with new dwellings that can only be sold to permanent residents of Honk Kong for the next 30 years.

Other countries (such as Mexico) have restrictions as well, but they are relatively easy to circumvent.

What Does This Mean For Toronto?

One of the major reasons that home prices have risen so much in Vancouver and Toronto is land scarcity. Thanks to geography and government restrictions on land usage, the supply of new single-family homes is extremely limited and even the overall supply, including condos, has been far less than demand. Hence, solutions like the one imposed in Australia–that foreigners can purchase only new residents–is not feasible in Canada.

The new BC tax has spurred questions regarding the impact on the housing market in the Greater Toronto Area. Price gains in the GTA, though more muted than in Vancouver, are still red hot and if foreign capital is diverted increasingly from Vancouver to Toronto, the Ontario government might consider similar measures–although so far, they say they will not.

The fact is we really don’t know the full extent of foreign buying in either Toronto or Vancouver. It is estimated to be around 5 percent of sales in recent months in Vancouver and less than that in Toronto. But government data collection is still incomplete and will be so for some time.

In addition, the federal government’s newly created Task Force on housing–with representation from industry and all levels of government–hasn’t had time to do the full analysis and make their proposals.

Ironically, while all of the furor is about excessive house price inflation, the federal banking regulator–the Office of the Superintendent of Financial Institutions (OSFI)–announced today that it is asking federally regulated lenders to stress test their books for a 40 to 50 percent drop in house prices in Vancouver and Toronto.

Earlier this month, they warned that they want to see “sound mortgage underwriting procedures in place that adapt to the ever-changing circumstances….OSFI expects mortgage lenders to verify that their mortgage operations are well supported by prudent underwriting practices, as well as sound risk management and internal controls that are commensurate with these operations.”

House prices cannot and will not continue to rise at a 30 percent annual rate. But, be aware of potential unintended consequences of government actions to deflate a bubble. A soft landing is what everyone hopes for, but soft landings are hard to engineer.

 

DR. SHERRY COOPER

Chief Economist, Dominion Lending Centres
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians

22 Jul

Market Update

General

Posted by: Anne Martin

As someone who is directly involved with the Barrie mortgage and real estate industry, it is important that I consistently check in with where the industry is at both as a whole and regarding the Barrie region.

According to the Barrie & District Association of REALTORS Inc.’s MLS System, residential property sales reached 659 units in May 2016, up 5.4% from May 2015 and an all-time record high. Although the City of Barrie itself saw a minimal decrease of 0.5% in sales activity from last year, the surrounding areas experienced a 16% increase with 334 total units sold. The Association is predicting that we may experience less sales per unit, however are likely to see a hike in prices. This is due to the increasing demand for homes in the Barrie area while the supply is unable to meet such demand currently.

The average price for an all-residential home in Barrie’s surrounding areas in May 2016 saw a 14.4% increase from May 2015, reaching $415,443. In the City of Barrie itself, a significant increase was also seen as the average price for a sold home hit $391,345 for a 16.4% jump. This increase is when compared to the average sell price for the first five months of 2015, indicating that this could potentially be the beginning of price increases as demand continues to outweigh supply.

While prices get higher, the number of listed homes is decreasing significantly. A drop of 13.5% was experienced in new residential listings from May 2015 to May 2016 as supply inches closer to some of the lowest number ever recorded. The Association says that 947 units were listed on the MLS System for active residential homes at the tail end of May 2016, a 36.1% fall from the same time one year earlier.

Interestingly enough, the dollar value of all homes in May 2016 was $296 million, a 26% increase and the highest amount of any month ever recorded for the area. This only confirms the fact that people are eager to move to the Barrie area and make it their home.

While demand is currently considerably higher than supply, this is terrific news for sellers. Not only are sellers going to be able to sell their home in a timely manner but they are also likely to get close to or more than their asking price. That being said it is still a good time for buyers to purchase before supply gets too low.

Interest rates are still at an all-time low making it still a great time to invest in a home in the Barrie area as prices are anticipated to continue to rise. You will need to be prepared to act quickly. With the migration from high priced cities like Toronto and the GTA and demand outpacing supply, Barrie and area has shown a dramatic increase in multiple offer situations making it even more imperative that you contact a mortgage agent or mortgage broker before locating your next home or investment property.

The Barrie real estate market is one that is crowded and extremely competitive. If you’re looking at purchasing or selling a home in the region, it is highly recommended that you seek a mortgage agent in Barrie in order to help you navigate the process. Anne Martin is a mortgage agent in Barrie and has been helping her clients find their way through the Barrie mortgage and real estate markets for years with great success. If you’re looking for a mortgage in the Barrie area, get in touch with Anne today!

Source: http://creastats.crea.ca/barr/

22 Jul

THINGS TO CONSIDER WHEN BUYING IN A NEW DEVELOPMENT

General

Posted by: Anne Martin

THINGS TO CONSIDER WHEN BUYING IN A NEW DEVELOPMENT

Things to Consider When Buying In a New Development

With plenty of activity in the real estate market and more new building slated over the next few years, here is my list of “Things to Consider When Buying in a New Development”.

Representation

Some buyers attend the display suite and consider a purchase directly with the developer sales person or the developers Realtor. Regardless of which kind of property you choose to purchase – new or existing – I always suggest you have a Realtor represent you. I have seen contracts where the buyer has not reviewed the details properly and they are not fully informed before they sign. The developer’s agent or Realtor is acting on behalf of their client – the seller. You should also have your own representation.

Interest Rates

If you are buying a home more than a year or more before completion, you may not know your actual fixed costs for the mortgage until well after you have signed your purchase agreement and paid your deposits. Depending on the lender and timeline, your costs may be unclear for several months. Even if you have a rate hold – things can change along the way with financing rules or the market. I always keep in touch with my clients and within a few months of completion we revisit the overall plan and make some decisions. Your down payment may need to change, the property value may shift or you may have experienced a life changing event (please don’t quit your job). Remember: Keep your mortgage broker in the loop.

Goods and Services Tax (GST)

When you buy a newly built home pay special attention to the contract price. In Canada Goods and Services Tax (GST) of 5% is payable on the purchase of a new home. In many cases the purchase price is set excluding GST so you need to add that tax amount to determine the total purchase price. If the home price is under $450,000 and will be your primary residence, you are eligible to receive a rebate equivalent to 36% of the GST. The rebate will be deducted and the new purchase price will be set Net of GST. There are many online calculators to determine this number and it should also be clear on the purchase agreement. Your mortgage broker will also calculate to confirm. For example a $400,000 purchase price excluding GST will result in an actual purchase price of $416,850. ($20,000 in GST minus the rebate of $3150). A purchase price of $500,000 excluding GST will result in an actual purchase price of $525,000 ($25,000 GST and no rebate).

Allowances and Discounts

In some cases you will have the option to upgrade the home with higher quality items such as flooring or a basement. These items can be included in the purchase price with no additional cost. The agreement will clearly outline the details and no cost will be associated for these items. However, if the contract states there was an allowance as a credit with a cost associated this will be considered a buyer credit and the amount on the contract will be deducted from the purchase price by the financial institution. There will be no financing on these items and the buyer will be responsible for the additional cost. This is common when buyers want to include furnishings such as in a display home. This can be a surprise to buyers as they are not fully clear on the purchase price and what is really included. It is important to review the contract closely with your own buying agent (Realtor) and if any financing questions arise – with your mortgage broker – to ensure you know your options.

Property Taxes

When a developer applies to the local city for a building permit the city will set the municipal taxes for the entire development. Once the developer is near completion and applies to the city for occupancy permits or submits the strata plan (for condo developments) it can still take some time for the city to determine the property tax for each home or condo unit. More and more lenders are using a percentage of the purchase price to determine the property taxes at the time of application unless confirmation of taxes can be provided by the city. In some cases this can be .5%-1.75% of the purchase price which can make a difference to qualify for financing. Your Dominion Lending Centres mortgage broker can review options with you to select the best overall financing solution for your purchase and avoid delays in securing an approval.

Strata fees – start low and grow

Since the strata plan on a new condo development isn’t in place when you make an offer to purchase a new home the strata fees on the purchase agreement will be set low. I recently had a client purchase a condo for $750K and the strata fees were under $170 per month. My clients understood this strata fee will increase to a higher level once the operating budget is set by the strata council and they should set their personal budget accordingly to expect an increase. For more details on the process and to understand the responsibilities of the developer, the strata corporation and the new buyer, click here.

Assignments

When a developer sells their houses or condo units well in advance of completion some original buyers may decide not to complete on the purchase and choose to assign the property to a new buyer. In this case there may be a lower or higher new purchase price. If there is a lower price the GST on the original price will apply. If the price is higher the GST on the original purchase price will apply. The property purchase transfer tax will apply to the new purchase price. The final property purchase transfer tax will be determined depending on the details of the transfer and the value of the property within limits for exemption is typically set by provincial government. For financing purposes, not all lenders will consider an assignment as the new purchase contract is between the original buyer and the new buyer and not with the developer. Some lenders will only consider the original price and the new buyer will have to pay the difference between the two amounts as the down payment to complete the purchase. Lenders who consider the new price will require a full appraisal to confirm the current value of the property. They will also need the original contract in addition to the new purchase contract and want to know details on the relationship between the seller and the buyer. There are many things to consider when you purchase a new home. Always consult your professional advisers, including your Realtor, Mortgage Broker, Financial Planner, Accountant and Lawyer to ensure the purchase helps to meet your lifestyle and financial goals.

 

 
Pauline Tonkin

PAULINE TONKIN

Dominion Lending Centres – Accredited Mortgage Professional
Pauline is part of DLC Innovative Mortgage Solutions based in Coquitlam, BC.

More Posts – Website

14 Jul

HOW TO QUALIFY FOR A MORTGAGE POST CONSUMER PROPOSAL

General

Posted by: Anne Martin

HOW TO QUALIFY FOR A MORTGAGE POST CONSUMER PROPOSAL

How To Qualify For a Mortgage Post Consumer Proposal

Congratulations you have made it through one of the toughest financial times in your life. It feels good to have this under control and know there is a light at the end of the tunnel. I too have been down this road in 1998 and now I educate the RIGHT way to have a plan.

There is no shame in going through either a consumer proposal or bankruptcy. Life throws wrenches into our well laid out plans. This is why we have these financial resources to get us back on our feet.  What is most important is that we don’t make the same mistakes again, really get to know how the mortgage and credit world works and use a mortgage planner along with your trustee or debt counsellor to have a plan of action!

There are no quick fixes or programs to get you back on track! Don’t get sold on some “swindler” taking advantage of your situation. There is a company out there that will loan you $2,500 that you pay back over 2 years and they report it to bureau for you. The cost – $900! That’s crazy and completely unnecessary.

Here are the Coles notes on what you need to know for those in consumer proposal. Remember, every situation is unique, so always have an experienced broker work with you:

  • You can refinance your home when in a consumer proposal and pay it out. You need more than 20% equity to do this. The sooner you pay it off, the faster it comes off your credit bureau.

  • If you are going with an INSURED mortgage (ie. 5-20% down) then you must be discharged from consumer proposal for two years and your credit has to be re-established.

  • Most lenders want the consumer proposal paid in full prior to mortgage approval. Very few will look your deal while in proposal.

  • Area dependent – Fort Mac or small rural communities are harder to get approvals.

  • We can use a bundled product strategy with a 1st mortgage to 80% LTV and 2nd mortgage to 90% to get your approval. Expensive, but works for many clients.

  • You want to plan to have some savings that are more than just your down payment if you are buying. Don’t be house rich and cash poor.

  • Sometimes we can use secondary credit like your car insurance, cell phone, or your rental payments to a landlord. If we can prove good repayment for the last couple years, we should be able to take it to a bank.

  • Also, you really need to ensure that, at the three year mark after you are done, that your consumer proposal is removed from credit bureau. I have seen someone refinance 2 years into their 5 year proposal and pay it out and forget to remove it from the bureau a  year later, so it keeps hurting your score and years of damage for no reason.

How long does a consumer proposal stay on a credit report?

Once you enter into a consumer proposal, it will start reporting on both Equifax and TransUnion credit reports within 30 days. Depending on your consumer proposal agreement with creditors, you will be making payments in a consumer proposal generally between three to five years.

Consumer Proposal will stay on your credit report for 3 years from the date you are discharged (made your last payment) regardless if you are looking at your Equifax or TransUnion report.

 How To Qualify For a Mortgage Post Consumer Proposal

Where do I start in building my credit again?

You can start rebuilding your credit as soon as you file your proposal. Bankruptcy is a bit different. You need to aim for TWO credit cards, open for TWO years, with an eventual available credit of $2500 each.  Just get TWO that start reporting.

  1. Apply for a secured credit card with HomeTrust Visa. You give them $500, they give you a credit card.

  2. Affirm Financial will approve $1000 credit card UNSECURED to those that are in consumer proposal.

  3. Scotia No Fee Credit Card

  4. TD Secured Credit Card

  5. Capital One Secured Credit Card

  6. Peoples Trust Secured Credit Card

Your credit and what have you can do to make it better:

They are lending YOU money, so a good broker will need to explain your situation, who you are, why you had issues and what you have done to improve your situation. This is called the 5 C’s of credit. This is a method used by lenders to determine the credit worthiness of potential borrowers. The system weighs five characteristics of the borrower, attempting to gauge the chance of default or you being a chronic mismanager of debts.

  1. Character – When lenders evaluate character, they look at stability — for example, how long you’ve lived at your current address, how long you’ve been in your current job, and whether you have a good record of paying your bills on time and in full. If you want a loan for your business, the lender may consider your experience and track record in your business and industry to evaluate how trustworthy you are to repay.

  2. Capacity – refers to considering your other debts and expenses when determining your ability to repay the loan. Creditors evaluate your debt-to-income ratio, that is, how much you owe compared to how much you earn. The lower your ratio, the more confident creditors will be in your capacity to repay the money you borrow.

  3. Capital – refers to your net worth — the value of your assets minus your liabilities. In simple terms, how much you own (for example, car, real estate, cash, and investments) minus how much you owe.

  4. Collateral – refers to any asset of a borrower (for example, a home) that a lender has a right to take ownership of and use to pay the debt if the borrower is unable to make the loan payments as agreed. Some lenders may require a guarantee in addition to collateral. A guarantee means that another person signs a document promising to repay the loan if you can’t.

  5. Conditions – Lenders consider a number of outside circumstances that may affect the borrower’s financial situation and ability to repay, for example what’s happening in the local economy. If the borrower is a business, the lender may evaluate the financial health of the borrower’s industry, their local market, and competition.

It all starts with the planning the day you decide to file for a consumer proposal. If you are finding you are starting to fall behind in payments or considering a consumer proposal call us at Dominion Lending Centres – we may be able to help.

KIKI BERG

Dominion Lending Centres – Accredited Mortgage Professional
Kiki is part of DLC Hilltop Financial based in Langley, BC.

9 Jul

NEW CREDIT REPORTING AND WHAT IT SAYS ABOUT YOU

General

Posted by: Anne Martin

NEW CREDIT REPORTING AND WHAT IT SAYS ABOUT YOU

Credit Score

New credit reporting and what it says about you and your spending habits may make all the difference between you buying a home now or later.

When home buyers contact me to apply for a mortgage, I always review their credit report with them along with the rest of their application, before they start looking at homes with a Realtor. If there are any issues with the credit history we can determine the reason, the next course of action and how it will impact financing a purchase.

There is a lot of valuable information in a credit report which provides an overview for lenders about your ability to borrow money. Consistent late payments, collections and bankruptcy have the biggest impact on lowering your score. Running a high balance or over your limit on your credit cards will also drive your credit score down. Scores range from 300-900 and a difference in score by as little as 50 points says a lot to a lender about you as the borrower. For example, a score of 550-599 represents 21% of delinquencies while a score of 600-649 only 11%. Delinquency rates are defined as those who have late payments beyond 90 days. If your score falls from one bracket to the lower bracket with late payments or collections, the difference can affect the interest rate you can receive or, worse yet, if you can qualify for the mortgage amount you need.

The most recent software update for the credit bureau reporting system has added some features which could have a significant impact on reporting. The new reports, which were released in early 2015, show three credit scores and one overall score.

The first score ranks based on open credit and balance to limit ratio. So if you have lots of open credit and your balances are low or reasonable the score is higher. High balances or over limit on all credit cards will drop your score.

The second score ranks based on late payments and collections over $250. If your late payments are beyond 90 days, your score will drop dramatically.

The third score ranks based on the number of third party collections in the last 3 years and the oldest revolving credit. So if you have outstanding parking tickets or an unpaid gym membership that you forgot about — they will come back to haunt you.

These individual scores were created to show specific behaviour by a borrower and if the credit score is trending up or down. This can give the lender an indication of a chronic issues with a potential borrower or if they are consistent with their credit usage.

With mortgage payments, lines of credit, auto loans, credit cards and even cell phone bills now reporting on the credit report,  consumers have to be diligent with spending and paying bills on time.

I recommend to all my clients to keep your credit report clean — after all, it is your identity.

Establish at least two trade lines of a minimum of $2,000. One credit card and one personal line of credit for example.

Maintain lower balances (< 65%) on all lines of credit or credit cards.

Make payments a few days before they are due to ensure you are always on time

If you get a parking ticket, fight it and lose – pay the bill and don’t let it go to collection.

Look at your credit report annually and certainly 3-6 months before making any major purchase such as a car or home. To view your own credit report visit www.equifax.ca.

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Pauline Tonkin

PAULINE TONKIN

Dominion Lending Centres – Accredited Mortgage Professional
Pauline is part of DLC Innovative Mortgage Solutions based in Coquitlam, BC.

 

 

6 Jul

TOP 5 REASONS PEOPLE DO NOT QUALIFY FOR A MORTGAGE

General

Posted by: Anne Martin

TOP 5 REASONS PEOPLE DON’T QUALIFY FOR A MORTGAGE

Top 5 Reasons People Can’t Qualify for a Mortgage

I receive calls every month from people who want to know how to qualify for a mortgage because they were declined by their bank. In many cases I can help them and in some cases they have to wait – but we identify what they need to do to get in a better situation to qualify.

Here are the top 5 reasons why people don’t qualify for a mortgage with their bank and come to see an independent mortgage specialist.

#5 Lack of a Down Payment or Equity

With the end of cash-back mortgages offered by the banks, borrowers now have to come up with the down payment on their own. They can receive it as a gift from a family member – but no more cash-back from the lender used for down payments. Minimum down payment is 5% for the purchase of an owner-occupied home or 20% for a rental property. Minimum 20% equity in the home if it is a refinance. This will help you qualify for a mortgage.

#4 Insufficient Income

With the high price of homes in the Vancouver area, sometimes people simply don’t earn enough money to manage a mortgage payment, property taxes and strata fees along with existing consumer debt and still have a life. For some home buyers, the only other option is to access more money for a down payment (gifted) or try to purchase a home with suite income or look at alternative lenders who accept room and board and other sources of income to help you qualify for a mortgage. In some instances, home buyers will look for someone else to go on title to add income to the application.

#3 New Mortgage Rules

For those with less than 20% down payment, the new mortgage rules are adjusted to the debt servicing ratios and amortization for borrowers. The new rules for debt servicing apply to those with good credit scores and allow for a max of 39% (gross debt servicing – GDS) of gross monthly income to cover the mortgage payments, property taxes and 50% of the strata fee. In addition a max of 44% (total debt servicing – TDS) of gross monthly income is allowed to cover the same and other consumer debts such as loans, credit cards and lines of credit. The maximum amortization was also reduced from 30 years to 25 years – effectively tightening qualification for borrowers equivalent to a 1% interest rate hike.

#2 Credit Issues

Some people don’t realize if they are late on credit card payments, their mortgage or loan payments the lender will update the credit bureau agencies and the late payments will reflect on their credit report, lowering their credit score. Other items can also effect credit scores such as a collection (if you didn’t pay that parking ticket or fitness membership fee they can send to a collection agency) and those marks on your credit report make your score drop like a rock. Going over your credit card limit, and applying for credit often requiring your credit report to be pulled by the bank, auto dealership and credit card companies will lower your score. Finally, consumer proposal and bankruptcy will greatly impact your score, which can stay on your report for up to 7 years if real estate was involved as is the case with bankruptcy.

#1 Too Much Debt

There are a growing number of consumers doing – well – too much consuming. Credit card debt is on the rise and over use of lines of credit are putting some people in a debt overload situation. Some pre-home-buyers go out and purchase that amazing new truck, along with a large monthly payment, which pushes their total debt servicing (TDS) ratio over the limit. Nice new truck – no home with a garage. Some home owners have so much consumer debt that they are unable to refinance their home to consolidate the mortgage and the credit card debt because the amount exceeds the maximum loan to value allowable (currently 80% of the value of the home) and if housing prices stabilize or drop in some areas – this makes it more difficult for home owners to qualify for that new mortgage and lower payments. Paying off your debt will help you qualify for a mortgage.

Do you want more information for your next mortgage? Contact any of us here at Dominion Lending Centres – we’re here to help!

 
Pauline Tonkin

PAULINE TONKIN

Dominion Lending Centres – Accredited Mortgage Professional
Pauline is part of DLC Innovative Mortgage Solutions based in Coquitlam, BC.

 

5 Jul

4 Things That Will Kill Your Mortgage Approval

General

Posted by: Anne Martin

4 THINGS THAT WILL KILL YOUR MORTGAGE APPROVAL

Home Purchase

So, you’ve worked hard to save every penny and have managed to finally afford the down payment necessary on a home. You have searched high and low, only to find the house of your dreams at a price you can afford. Though your credit rating is good and you have a stable job, there are some key things to avoid while waiting for your mortgage to be approved.

Here are 4 things you must absolutely avoid to ensure that you get that dream house:

1. Buying a Vehicle

Your current car may have finally given up or a great deal has arisen, but before making any decision on a new vehicle, check with your mortgage professional. You need to ensure that the numbers you provided on your mortgage application hold true in order to be approved!

2. Changing your Credit or Payment Routine

Before putting extra money towards a debt or changing your payment schedule on any liability, you must check with your mortgage professional. Again, anything that doesn’t align to the information you provided on your mortgage application could put your approval in jeopardy.

3. Changing Jobs

There are many opportunities and challenges that come with any job, but before deciding to drastically change your employment situation, keep the following in mind:

  • If you are accepting a new position you need to ask if you will be given a probation period. Any mortgage lender will not accept probationary employment on a mortgage application.
  • If your income situation is changing, such as receiving bonuses, overtime, or commissions, you could be putting your approval in limbo. This is risky because these job perks require a 2 year history before a lender will accept them as income.
  • If you cannot stand your job any longer and are considering leaving the position, you need to talk to your mortgage professional immediately. The information you provide on your application must check out, especially when it comes to your employment. Most likely, you will need to wait to leave your job until after the mortgage has been approved and you’ve taken possession of the home or you’ll risk losing your dream house.
  • If you are considered a contractor or self-employed person, you must provide a 2 year history in order to be approved for a mortgage. If you are considering going into this line of work you’ll need to wait until after you take possession.

4. Making Payments Late

While waiting for your mortgage to be approved, make sure you make every payment early or on time! If your credit experiences even a slight drop because of a late payment or maxed out credit card, a lender will not approve your mortgage and will cancel the application.

Getting approved for a mortgage doesn’t have to be difficult! As long as you do your due diligence and know all the information, you will be on the path to a happy home-buying process. Contact Dominion Lending Centres to inquire about mortgage approvals. We’re always happy to lend a helping hand!

ALIM CHARANIA

Dominion Lending Centres – Accredited Mortgage Professional
Alim is part of DLC Regional Mortgage Group based in Red Deer, AB.