CMHC CHANGES TO ASSIST SELF-EMPLOYED BORROWERS

As a self-employed person myself, I was happy to hear that CMHC is willing to make some changes that will make it easier for us to qualify for a mortgage.
In an announcement on July 19, 2018, the CMHC has said “Self-employed Canadians represent a significant part of the Canadian workforce. These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates.” — Romy Bowers, Chief Commercial Officer, Canada Mortgage and Housing Corporation. These policy changes are to take effect Oct. 1, 2018.

Traditionally self-employed borrowers will write as many expenses as they can to minimize the income tax they pay each year. While this is a good tax-saving technique it means that often a realistic annual income can not be established high enough to meet mortgage qualification guidelines.
Plain speak, we don’t look good on paper.

Normally CMHC wants to see two years established business history to be able to determine an average income. But the agency said it will now make allowances for people who acquire existing businesses, can demonstrate sufficient cash reserves, who will be expecting predictable earnings and have previous training and education.
Take for example a borrower that has been an interior designer with a firm for the past eight years and in the same industry for the past 30 years, but just struck out on his own last year. His main work contract is with the firm he used to work for, but now he has the ability to pick up additional contracts from the industry in which he has vast connections.
Where previously he would have had to entertain a mortgage with an interest rate at least 1% higher than the best on the market and have to pay a fee, now he would be able to meet insurance requirements and get preferred rates.

The other change that CMHC has made is to allow for more flexible documentation of income and the ability to look at Statements of Business Professional Activity from a sole-proprietor’s income tax submission to support Add Backs of certain write-offs to support a grossing-up of income. Basically, recognizing that many write-offs are simply for tax-saving purposes and are not a reduction of actual income. This could mean a significant increase in income and buying power.

It is refreshing after years of government claw-backs and conservative policy changes to finally see the swing back in the other direction. Self-employed Canadians have taken on the burden of an often fluctuating income and responsible income tax management all for the ability to work for themselves. These measures will help them with the reward of being able to own their own home as well.

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
http://betterthanbankmortgage.com/
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There are quite a few online services that help you locate people in the home maintenance and repair business, including:

HomeStars: A database of contractors and tradespeople, with reviews. There were mixed comments about the experience of using this service. One reader said he’s had good success using HomeStars, while a couple of others said good reviews do not necessarily mean you’ll be happy with the work.

Houzz: A website offering reno design ideas and a way to connect with construction pros.

Jiffy: Quickly connects you with home maintenance people, with pre-set rates.

ProjectUp: Launching this month, ProjectUp offers the opportunity to post your project on the website and have contractors bid on the project.

https://setter.com/: Bills itself as a “personal home manager” that will help you find people to tackle all your household jobs.

Referrals from neighbours, family and friends: A few people mentioned that they used contractors who had already done work for their neighbours.
Community Facebook pages: These are a great place to ask for referrals. Google and Yelp ratings: They’re worth checking before you hire someone.

Once you found someone to get you renovation done, give us a call to assist with the financing 877-357-5366

****NEW OFFICE LOCATION****
106- 5017 Victoria Ave Niagara Falls L2E4C9

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/
Check out our full line of DLC Visa cards http://betterthanbankmortgage.com/visa-cards/

Story Credit
PERSONAL FINANCE COLUMNIST
OTTAWA
rcarrick@globeandmail.com
http://www.robcarrick.com/

ALL ABOUT PRE-APPROVALS

Are you in the market for a new home? That’s great – but if you’re not already pre-approved from your mortgage broker, be sure to read on.

Pre-approvals are very important for two reasons.

They give you confidence in knowing that a specific amount of financing is available for you.
A pre-approval can put you in a positive negotiating position against other home buyers who aren’t pre-approved.
Not all pre-approvals are the same, though. There are essentially three different kinds.

The first occurs when you meet with a mortgage professional and tell them how much you make. They’ll say something along the lines of “Great, you’re pre-approved.” The mortgage professional has only looked at your income. There is no real pre-approval.
The second kind is when a mortgage professional asks you how much you make and then pulls your credit bureau. This allows a mortgage professional to lock in your mortgage rate for up to four months. This pre-approval still isn’t a sure thing.

The third kind of pre-approval – and the one that we do – is a lot more encompassing. We get all of your papers prepared right off the bat, which allows us to eliminate any unforeseen issues with your approval. Sure, it’s more work up front – but we do this because it’s the right thing to do.
If you’d like to get a pre-approval, contact a Dominion Lending Centres mortgage BTB Mortgage Solutions professional! We’re here to help. 905 357 5366

****NEW OFFICE LOCATION****
106- 5017 Victoria Ave Niagara Falls L2E4C9

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/
Check out our full line of DLC Visa cards
http://betterthanbankmortgage.com/visa-cards/

New accounting rules adopted by the banks mean they’re paying closer attention than ever before to your financial situation and your home’s value when you renew a mortgage.

Mortgage renewals used to be utterly routine – a virtual rubber stamp. Now, if your credit score has taken a hit or your home has fallen in value, you might not qualify for the best available rates.

The new accounting rules are called IFRS 9; IFRS stands for International Financial Reporting Standard. One effect of these rules is to cause banks to pay close attention to early warning signs that clients may run into trouble paying their mortgage.

“Let’s say the bank has noticed that your credit score went from 750 to 580 and/or your loan-to-property-value ratio has gone way up,” said Robert McLister, founder of RateSpy.com. “Anything that worsens risk in a lender’s eyes is going to potentially warrant a higher rate at renewal.”

Mortgage brokers estimate that anywhere from fewer than 5 per cent to 15 per cent of borrowers may be negatively affected by the new rules. The borrowers most vulnerable to getting an elevated mortgage rate are in expensive cities, such as Toronto and Vancouver, where young owners must juggle expensive mortgages and daycare if they have children.

It’s difficult to track what banks are actually doing because there don’t yet appear to be any standardized policies. But mortgage brokers report that banks are in some cases doing soft credit checks, which means peeking at your credit file to see whether your credit score has worsened. Banks may also do appraisals on renewal to ensure that the ratio of the amount of your outstanding mortgage to the value of your home is declining as it should be.

Mr. McLister said he’s been told by some bank executives that mortgage rates for people whose financial position has slipped might be 0.05 to 0.15 of a percentage point higher, which is fairly insignificant. “I don’t know if the answers I’m getting are real,” he said. “Bank execs always try to downplay things like this because they don’t want people getting excited.”

The risk of having to renew at higher rates just keeps growing for these and other lenders. Well-discounted five-year fixed-rate mortgages are close to one percentage point higher than they were last summer. Also, we’ve seen the emergence of a trend where mortgage rates today are higher for some people than others. For example, someone with a down payment of less than 20 per cent now gets a rate that on average might be 0.35 of a point better than someone who puts down 20 per cent or more. Below 20 per cent, the borrower is required to pay for insurance that protects a lender against default.

Mortgage stress tests for borrowers also have an effect on rates. The stress tests are designed to see whether you can afford mortgage rates that are higher than current levels. If you’re renewing a mortgage and want to move to a new lender, you have to be able to pass the stress test. If you can’t do that, you’re stuck with a current lender that has no need to offer you its best possible discount.

Veteran mortgage broker Jim Tourloukis offered a couple of suggestions if your lender is offering you a competitive renewal rate on a five-year fixed mortgage. One is to consider switching to a variable rate mortgage. A variable rate mortgage with even a weak discount today would be comparable with a competitive five-year fixed rate.

Mr. Tourloukis said credit unions aren’t bound by the requirement to do a stress test on mortgage clients, so they’re another option if you don’t like the rate you’ve been offered on renewal and want to change lenders.

One more effect of IFRS 9 is the way it subverts the home ownership fairy tale that you just need to get into the market to live happily ever after. Sure, you might struggle financially at some point, but that’s no biggie because your home will rise in value and you’ll be doing the most fulfilling thing a person can ever do in life, which is own a home.

Today’s reality of home ownership is that that those financial struggles of home ownership matter. If your credit score drops or your home falls in value, there can be consequences.

Give us a call and negotiate your mortgage renewal.

Story credit:
Rob Carrick
PERSONAL FINANCE COLUMNIST
rcarrick@globeandmail.com
http://www.robcarrick.com/

****NEW OFFICE LOCATION****
106- 5017 Victoria Ave Niagara Falls L2E4C9

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/
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Mortgage rules and the new market
If you own a home, or looking to buy one, you probably know about tighter mortgage rules. In case you were unaware, last fall, OSFI, (the Office of Superintendent of Financial Institutions) the agency that regulates the financial industry, announced changes to rules around mortgages. The biggest change, that affects you, the consumer, relates to uninsured mortgages, or homebuyers with 20 per cent or more for a down payment. These people will have to go through a “stress test” or qualify using a minimum qualifying rate.

These new rules came into effect in January and come on the heels of several rate hikes from the Bank of Canada. And many economists and industry watchers are predicting the bank has a few more rate hikes instore before the year is out. We may already be seeing some of the effects of all this pressure on mortgage financing. Real estate markets, especially in the very heated Toronto-area, are starting to cool quite a bit. The Canadian Real Estate Association (CREA) has adjusted its forecast for home sales across the country, predicting an 11 per cent decline from 2017.

So, do you need to be worried?

If your mortgage is coming up for renewal and you’re staying with your original lender, you don’t need to be at all.

For now, you can just renew without requalifying. However, there have been hints the government could change that in the future.

If you’ve got a steady job, a credit score over 700, no debts and you make $60,000 a year in salary, getting a mortgage also shouldn’t be a problem in this lending environment.

But, it could be tougher if you’re newly self-employed or carrying a large amount of consumer debt. That said, mortgage brokers have access to literally hundreds of lenders and can always find a way to get funding.

So taking everything into consideration, the best thing to do is review your portfolio with your mortgage broker. We’re still in a relatively low rate environment, but it could change come this time next year.

If your mortgage isn’t up until 2019, it may make sense to get out of your current mortgage and pay a small fee to get a better long-term rate.

It’s always a good time to review your mortgage because everybody’s situation is different regardless of where you are in your term.

****NEW OFFICE LOCATION****
106- 5017 Victoria Ave Niagara Falls L2E4C9

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/

Check out our full line of DLC Visa cards
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When it’s cooler outside than inside, open your windows instead of using air conditioning. Use a window fan, blowing toward the outside, to pull cool air in through other windows and to push hot air out. When it’s hotter outside than inside, close your windows and draw window coverings against direct sunlight. On hot days, delay heat-producing tasks, such as dishwashing, baking or doing laundry, until the cooler evening or early morning hours. Caulk around window and door frames, use weather stripping on exterior doors, and have a professional seal gaps where air can travel between the attic and your living space. Use energy-efficient lighting in your home. CFL and LED light bulbs operate cooler and cost less to use because most of their energy produces light instead of heat. Incandescent light bulbs, on the other hand, lose 90% of their energy as heat. Leafy shade trees planted on the east and west sides of your home can improve comfort and decrease cooling needs by blocking heat and sunlight. You’ll still have the benefit of heat from the sun in the winter, after the leaves fall. Check with your local garden centre for recommendations.

DID YOU KNOW….
Lenders make a lot more money when they renew your mortgage than they did on your initial term. That’s partly because they don’t have to compensate anyone for referring your business (or compensate them as much). But it’s also because many renewers don’t comparison shop as much or negotiate as hard. According to a recent Maritz/CAAMP survey, only 56% of borrowers negotiated their mortgage rate at renewal. A remarkable four in 10 took the first rate their bank offered. That’s a scary statistic considering banks rarely, if ever, offer their lowest rate upfront regardless of how long you’ve been a customer! That’s why it’s so important to rely on your mortgage broker at renewal as well.

****NEW OFFICE LOCATION****
106- 5017 Victoria Ave Niagara Falls L2E4C9

Michael Distefano
Mortgage Agent and Manager of operations
DLC BTB Mortgage Solutions FSCO 12039
Niagara’s largest Mortgage Broker
106- 5017 Victoria Ave Niagara Falls L2E4C9
T 905 357 5366 F 905 357 6654 C 905 246 5363
APPLY ONLINE ANYTIME http://betterthanbankmortgage.com/mortgages/how-to-apply/

Check out our full line of DLC Visa cards
http://betterthanbankmortgage.com/visa-cards/