Update Feb 2017: Mortgages, Real Estate and Politics!!!

Marci • February 2, 2017

Happy 2017 Everyone!

Wow!! Where did January go? Just like that it is almost Spring in Vancouver! (Although, I hear we might have a bit more Winter/Snow coming this weekend). I am reaching out with an update on the many changes/announcements in the mortgage industry over the last few months. Don’t worry – when I say “politics” in the subject here, I mean Canadian and BC politics – No Trump talk here!!!

There have been a number of mortgage policy announcements, rate changes, and Government program launches/changes recently. If you are overwhelmed and tired of hearing about mortgages and real estate, you are not alone!! I am hoping that I can help to “clear the clutter” and offer some explanations for what’s really happening.

Here is a summary of the major items and some links to resources if you want to read more and dig deeper!

October 2016 – Federal Government Mortgage Changes:

On October 3rd, 2016 the Federal Government announced changes to mortgages in Canada that have impacted how much borrowers qualify to borrow and the types of mortgages that can be insured. The changes were extensive and were rolled out in two stages. Click Here for my blog post outlining the changes in detail and here for my initial email/reaction to the changes. This video also helps break down what happened and why!

Generally speaking, there has been confusion about the changes. December 2016 saw all lenders change policies for all mortgage lending and increase fixed interest rates across the board to help cover extra costs associated with the new government policies!

Just this week, a parliamentary committee has convened in Ottawa to review the changes. This review is the result of a HUGE out pouring of concern by the Mortgage Broker industry, the banks and consumers in general, regarding the policies. Mortgage Professionals Canada (MPC), the national industry association for Mortgage Brokers, will be presenting a paper in Ottawa this week that outlines the concerns we have for the industry and for consumers. To quote MPC:

“Put simply, the government has made too many changes in too short a period of time. It appears that the Ministry of Finance, OSFI and CMHC are working toward a common goal but are not aligned in their strategy.”

The primary message from all parties is that the changes were perhaps too much all at once and overall they reduce competition and harm consumers. Click to read the full submission from MPC……It is a long, but interesting read! (OK – maybe not so interesting unless you are a “mortgage geek” like me!!)

B.C. Government Home Loan Program

On December 15th, 2016 the BC Government announced a program to help First Time Buyers with an interest free loan to be use towards a down payment. The program details can be found HERE. The first applications for this “free” money started being accepted on January 15, 2017. The loan comes with costs and is technically not free, but it can be beneficial for some buyers. As everyone’s situation is very different, please contact me directly to talk about your particular needs and to see if this loan program might be a fit for you!!

CMHC – Insurance Premium Increases

On January 17, 2017, CMHC announced mortgage insurance premiums will increase effective March 17, 2017. Overall the increases were quite minimal. The biggest impact will be felt by buyers with a 5 – 10% down payment and especially where some of the down payment is from non-traditional (borrowed) sources.(FYI – the BC Home Loan is a “borrowed source” of down payment and = higher mortgage insurance premiums). I published a blog post here that outlines the premium changes and gives some examples of the impact.

Foreign Buyer Tax

The big story this past summer was the introduction by the BC Government of a 15% Foreign Buyer tax on home purchases made by foreign buyers. There were some issues with the way the tax was implemented (with just 6 days warning) and also in that the policy included Permanent Residents to Canada who might have been working and living here for several years. This past weekend, the BC Government announced an amendment to the tax whereby residents holding a work permit and filing taxes in Canada, will now be exempt. We continue to await further details. This article in the Financial Post outlines the latest press release by Premier Christy Clark. CLICK HERE Stay tuned for more details as we get them…..

Bank of Canada Rate – No Changes

The most recent Bank of Canada Announcement was on January 18th, 2017 and no changes were made. You will find the details of that announcement here.

Prime is still 2.70%! We can still get Variable Rate mortgages at prime MINUS 0.35% to 0.50%. (IE: 2.20% 5 year Variable rate still exists). The fixed rate mortgage rates increased in December and there is now tiered pricing with all lenders depending on down payment, property type, and amortization. A standard “rate sheet” is now super tricky as every deal will have different nuances and in the world of mortgages since October 3rd, 2016, different deals = different rates!!

Call or email me to talk about your situation and for a personalized rate quote. marci@askmarci.ca or 604-816-8950

Increased BC Home Owner Grant Threshold

The Government of British Columbia released news on January 10th, 2017 that they have increased the home owner grant threshold from $1.2M to $1.6M, a 33% increase over last year. The goal was to help keep property taxes affordable, and to ensure all those who received the grant in 2016 will also receive it in 2017. Yes, I blogged about this too and you can find details here!

Phew – if you made it through all that and you are still reading – THANK YOU!! That was quite honestly a lot of stuff to cover.

As always, please reach out to me directly to ask questions and to discuss your personal situation. Today, more than ever, each mortgage borrower will face different policies, rates and products. As an Independent Mortgage Broker, I can offer you those choices and options.

All the best,

Marci

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Alternative Lending Provides You With Options

By Marci Deane • February 19, 2025

Alternative lending refers to any lending practices that fall outside the normal banking channels. Alternative lenders think outside the box and offer solutions to Canadians who wouldn’t otherwise qualify for traditional mortgage financing. In an ideal world, we’d all qualify for the best mortgage terms available. However, this isn’t the case. Securing the most favourable terms depends on your financial situation. Here are a few circumstances where alternative lending might make sense for you. Damaged Credit Bad credit doesn’t disqualify you from mortgage financing. Many alternative lenders look at the strength of your employment, income, and your downpayment or equity to offer you mortgage financing. Credit is important, but it’s not everything, especially if there is a reasonable explanation for the damaged credit. When dealing with alternative lending, the interest rates will be a little higher than traditional mortgage financing. But if the choice is between buying a property or not, or getting a mortgage or not, having options is a good thing. Alternative lenders provide you with mortgage options. That’s what they do best. So, if you have damaged credit, consider using an alternative lender to provide you with a short-term mortgage option. This will give you time to establish better credit and secure a mortgage with more favourable terms. Use an alternative lender to bridge that gap! Self-Employment If you run your own business, you most likely have considerable write-offs that make sense for tax planning reasons but don’t do so much for your verifiable income. Traditional lenders want to see verifiable income; alternative lenders can be considerably more understanding and offer competitive products. As interest rates on alternative lending aren’t that far from traditional lending, alternative lending has become the home for most serious self-employed Canadians. While you might pay a little more in interest, oftentimes, that money is saved through corporate structuring and efficient tax planning. Non-traditional income Welcome to the new frontier of earning an income. If you make money through non-traditional employment like Airbnb, tips, commissions, Uber, or Uber eats, alternative lending is more likely to be flexible to your needs. Most traditional lenders want to see a minimum of two years of established income before considering income on a mortgage application. Not always so with alternative lenders, depending on the strength of your overall application. Expanded Debt-Service Ratios With the government stress test significantly lessening Canadians' ability to borrow, the alternative lender channel allows expanded debt-service ratios. This can help finance the more expensive and suitable property for responsible individuals. Traditional lending restricts your GDS and TDS ratios to 35/42 or 39/44, depending on your credit score. However, alternative lenders, depending on the loan-to-value ratio, can be considerably more flexible. The more money you have as a downpayment, the more you’re able to borrow and expand those debt-service guidelines. It’s not the wild west, but it’s certainly more flexible. Connect anytime Alternative lending can be a great solution if your financial situation isn’t all that straightforward. The goal of alternative lending is to provide you with options. You can only access alternative lending through the mortgage broker channel. Please connect anytime if you’d like to discuss mortgage financing and what alternative lending products might suit your needs; it would be a pleasure to work with you.

Benefits of Working with an Independent Mortgage Professional

By Marci Deane • February 12, 2025

If you need a mortgage, working with an independent mortgage professional will save you money and provide you with better options than dealing with a single financial institution. And if that is the only sentence you read in this entire article, you already know all you need to know. However, if you’d like to dig a little deeper, here are some reasons that outline why working with an independent mortgage professional is in your best interest. The best mortgage is the one that costs you the least over the long term. An independent mortgage professional can help you achieve this. Mortgages aren’t created equally. Oftentimes slick marketing leads us to believe the lowest “sticker price” is the best value. So when it comes to mortgage financing, you might assume the mortgage with the lowest rate is the best option. This isn’t always the case. When considering a mortgage, your goal should be to find the mortgage that will cost you the least amount of money over the total length of the mortgage. There are many factors to consider, such as your specific financial situation, the rate, initial term length, fixed or variable rate structure, amortization, and the penalties incurred should you need to break your mortgage early; the fine print matters. An independent mortgage professional can walk through all these factors with you and will help you find the mortgage that best suits your needs. Sometimes taking a mortgage with a slightly higher rate can make sense if it gives you flexibility down the line or helps you avoid huge payout penalties. Working the numbers with an independent mortgage professional will save you money in the long run instead of just going with what a single lender is offering. Save time by letting an independent mortgage professional find the best mortgage product for you. Let's face it, getting a mortgage can be challenging enough on its own. Everyone’s financial situation is a little different and making sense of lender guidelines is a full-time job in itself. So instead of dealing with multiple lending institutions on your own, when you work with an independent mortgage professional, you submit a single mortgage application that is compared to the lending guidelines of various mortgage lenders. This will save you time as you don’t have to go from bank to bank to ensure you’re getting the best mortgage. Simply put, an independent mortgage professional works for you and has your best interest in mind, while a bank specialist works for the bank and has the bank's best interest in mind. It’s no secret that Canadian banks make a lot of money. It seems every quarter they turn billions of dollars in profit (despite the economic environment). They do this at the expense of their customers by charging as much interest as they can and structuring mortgages to their benefit. It’s all about the alignment of interest. Bank employees work for the bank; the bank pays them to make money for the bank. In contrast, independent mortgage professionals are provincially licensed to work for their clients and are paid a standardized placement or finder’s fee for matching borrowers with lenders. When you work with a single bank, you only have access to the products of that bank. When you work with an independent mortgage professional, you have access to all of the lenders that mortgage professionals have relationships with and all their products. Working with an independent mortgage professional will save you money, time, and provide you with better mortgage options. Plus, you have the added benefit of working with a licensed professional looking out for your best interest, providing you with the best possible advice. If you’d like to know more or to discuss mortgage financing, please connect anytime; it would be a pleasure to work with you.

How to Ensure a Smooth Home Purchase

By Marci Deane • February 5, 2025

Chances are, buying a home is one of the most important financial decisions you’ll make in your life. And as mortgage financing can be somewhat confusing at the best of times, to alleviate some of the stress and to ensure your home purchase goes as smoothly as possible, here are six very high-level steps you should follow. While it might seem like the best place to start the home buying process is to browse MLS on your phone and then contact a Realtor to go out and look at properties, it’s not. First, you’re going to want to work with a licensed independent mortgage professional. When you work with an independent mortgage professional, instead of working with a single bank, you’ll be working with someone who has your best interest in mind and can present you with mortgage options from several financial institutions. The second step in the home buying process is to put together a mortgage plan. Unless you have enough money in the bank to buy a home with cash, you’re going to need a mortgage. And as mortgage financing can be challenging and not so straightforward, the best time to start planning for a mortgage is right now. Don’t make another move until you discuss your financial situation with an independent mortgage professional. It’s never too early to start planning. As part of your mortgage plan, you’ll want to figure out what you can afford on paper, assess your credit score, run some financial scenarios, calculate mortgage payments, and have a clear picture of exactly how much money is required for a downpayment and closing costs. You’ll also be able to discuss which mortgage product is best for you, considering different mortgage terms, types, amortizations, and features. Now, what you qualify to borrow on paper doesn’t necessarily mean you can actually afford the payments in real life. You need to consider your lifestyle and what you spend your money on. Understanding your cash flow is the key. Make a budget to verify you can actually afford your proposed mortgage payments and that you have enough funds to close on the mortgage. No one wants to be house-poor or left scrambling to come up with funds to close at the last minute. If everything looks good at this point, the next step will be to get a preapproval in place. Now, a pre-approval is more than just typing some numbers into a form or online calculator; you need to complete a mortgage application and submit all the documents requested by your mortgage professional. Only proceed with looking at properties when you’ve been given the green light from your mortgage professional. When you’ve found a property to purchase, you’ll work very closely with your mortgage professional to arrange mortgage financing in a short period of time. This is where being prepared pays off. As you’ve already collected and submitted many documents upfront during the preapproval process, you should be set up for success. However, remain flexible and provide any additional documentation required by the lender to secure mortgage financing. Once you have firm lender approval and you’ve removed conditions on the purchase agreement, don’t change anything about your financial situation until you have the keys. Don’t quit your job, don’t take out a new loan, or don’t make a large withdrawal from your bank account. Put your life into a holding pattern until you take possession of your new home. So there you have it, six steps to ensuring a smooth home purchase: Work with an independent mortgage professional. Put together a mortgage plan. Figure out what you can actually afford. Get a pre-approval. Provide the necessary documentation. Don’t change anything about your financial situation until you take possession. If you’d like to discuss your personal financial situation and find the best mortgage product for you, let’s work together. We can figure out a plan to buy a home as stress-free as possible. Please connect anytime; it would be a pleasure to work with you.