Edmonton Mortgages

CMHC Self-Employment Qualification Updates

On Monday, October 7, new guidelines from Canada Mortgage and Housing Corp. (CMHC) came into effect that could make it easier for self-employed individuals to qualify for mortgage financing.

The changes apply to individuals who have put down a down payment of 20 percent or less, as well as all mortgages not already insured under the 20 percent down payment rule.

Under these new guidelines, lenders will be given more flexibility when it comes to providing mortgage financing for self-employed individuals. The options will allow them to assess a broader array of variables when determining self-employed individuals' qualification for a mortgage.

Prior to the changes, it was difficult for self-employed individuals to obtain mortgage financing. Some could not meet the qualifications at all, despite having adequate savings and low expenses, while others would be forced to seek out financing from alternative lenders, who would aptly charge them higher interest rates, due...

Approved For $400,000? Check Again...

We all know that Finance Minister Bill Morneau, announced new mortgage and housing rules on Monday, so we caught up with Mortgage Specialist, Margaret Adekunle of Marg Mortgages. We asked her a few questions to help us get an overview of the upcoming changes and how it affects us.

BERET: How will the qualification standards for high ratio (insured) mortgages impact for buyers?

Margaret: The new qualification standards mean that buyers have to qualify at a higher interest rate. Right now, lenders are qualifying buyers based on a discounted rate of 2.44% for a 5 year fixed mortgage, regardless of the posted rate. The down side to qualifying a buyer at the posted rate is that a buyer that will qualify for a $400,000 mortgage at 2.44% will only qualify for a mortgage of $320,000 at 4.64%


Mortgage Secrets Everyone Should Know

Mortgages are not a subject we learn about in high school, although I wish they were.

Credit, interest rates and qualifying for a mortgage are all things that will greatly affect your lifestyle going forward. Some hear about them through friends, family or the Internet.

My concern with this is the mortgage market is a changing and evolving model and it can be a challenge to ensure you’re getting accurate information.

We have mortgage specialist that have been working in the mortgage industry for over 30 years and are still learning new things every day. That being said, there a few mortgage “myths” I hear regularly that I want to take to time to clear up, as I think the more you know about the biggest debt of your life, the better!

You can get a mortgage even if you have a low credit score: Your credit score is only a small piece of the mortgage approval puzzle. In addition to income, down payment, assets and property details, a potential lender...

Will Banks Cut Their Interest Rates to Reflect Bank of Canada's Rate Cut?

Overnight rate cut by Bank of Canada usually matched by decrease in prime lending rate.

Canadians have been left wondering whether they'll enjoy lower rates on mortgages and other loans in the aftermath of a surprise interest rate cut by the Bank of Canada on Wednesday,

Canada's five biggest banks are deciding whether to cut their prime lending rate, which affects the interest on some mortgages, lines of credit and other financial products.

Bank of Canada Cuts Rate in Surprise Move:

 Already, TD Bank has decided not to cut its prime rate, at least not for now.

"Our decision not to change our prime rate at this time was carefully considered and is based on a number of factors, with the Bank of Canada's overnight rate only being one of them," said Alicia Johnston, a spokewoman...

RBC Lowers Mortgage Interest Rates – Other Major Banks Follow Suit

RBC was first out of the gate, so to speak. This past weekend, this major Canadian bank shaved an average of 10 basis points off of various fixed-rate mortgages. The five-year closed rate went down to 3.69 percent. No celebration, no fanfare. The rate just quietly dropped from its previous 3.89 percent. It wasn’t long before more of Canada’s major banks followed suit.

At last count three banks joined the discounting mortgage rates parade. Scotiabank lowered its five-year fixed rate to 3.49 percent this past Tuesday. Previously it was at 3.59 percent. Not to be outdone Bank of Montreal, or BMO, lowered its five-year fixed rate by 20 basis points, from 3.89 percent to 3.69 percent.  TD Canada Trust lowered its five-year fixed to 3.69 percent, a 10 basis point reduction. Other mortgage loan terms and packages also saw reductions at the latter two banks. Then there is True North Mortgage, a brokerage that is offering a mortgage rate of 3.19 percent, currently the lowest in the industry....

Getting a Mortgage if You’re Self-Employed Requires More Effort

Getting a mortgage these days is tough enough, trying to achieve the same lofty goal if you’re self-employed is even worse. Granted, when the economy was in the darkest depths of the financial downturn, self-employed parties needed an extra large dose of luck. Even then the chances were almost nil.

Fast forward a few years and you have a collection of successful folks who decided to go it alone once they lost their jobs during the recession. It was one solution to an endless parade of closed doors and rejections. Now some of these entrepreneurial business people have reached a point where they want to upgrade their homes to better accommodate their office space. Or, they may even consider a stand alone office.

Either way, the majority of these buyers will need a mortgage. Lending companies are starting to take a second look at these individuals and seem to be receptive to self-employed mortgages, with reservations. Essentially, the more you do your homework before you step foot in a financial...

Mortgage Survey: Canadians Favour Fixed Mortgages Over Variable

The firm of Harris Decima recently conducted a survey across Canada regarding mortgages.  In it they found that for the third straight year, Canadians tend to favour fixed rate mortgages over the variable. Another find, on the issue of the mortgage rates themselves, was that the more Canadians are of the belief that the low mortgage rates of today will be around for at least the next year.

On the fixed versus variable mortgage issue, 45 percent of those surveyed would select a fixed mortgage. Of those in the 25 to 34 year old demographic, 54 percent would make a similar choice. This indicates that most first home buyers would lean this direction.  Some 26 percent of those surveyed would choose a variable mortgage, and 25 percent were in the uncertain column. That 25 percent is a marked increase over the 16 percent that were in the undecided column in the 2012 survey.

Colette Delaney, CIBC Executive Vice President of Mortgage, Lending, Insurance and Deposit Products, responded to the...

No Interest Rate Hike Expected In Near Future Per Bank Of Canada

The Bank of Canada concedes that the nation’s economic picture is currently a bit weaker than expected, that same entity did predict a reversal in the near future. Growth on the economic front in Canada did not quite live up to the predictions by the Bank or a considerable number of financial analysts. At the same time the housing market and consumer debt situation seem to be stabilizing. In the United States and across Europe, there are still concerns about debt and the markets, but things are improving.

All of this adds up to the Bank of Canada deciding that interest rates should remain where they are, and stay there for the foreseeable future.

In a rare move, the announcement that the Bank of Canada was not raising the interest rate was coordinated with the release of their Monetary Policy Report. This quarterly publication outlines all the factors, domestic and global, that affect Canada’s economy.

The interest rate will remain at one percent, where it has been since...

Six of Canada’s Bank’s Get Credit Downgrade By Moody’s

Six Canadian banks got a bit of a wake-up call this past Monday. Moody’s downgraded their credit ratings, making investors suitably nervous. Those getting the lower credit scores include Scotia Bank, CIBC, TD and some smaller outfits, Desjardins and National Bank. RBC escaped the downgrade.

Reasons given by Moody include higher home prices and consumer debt being at high levels. The banks were downgraded one level and they were also put under review for fall. But, Moody’s noted, these banks are stable and expected to remain so.

David Beattie with Moody’s noted that Canadian banks are vulnerable because of those inflated home prices and the high amount of debt carried by consumers. Of particular concern is the prediction, by some analysts, that home prices may decrease in value by as much as 25 percent over the next 24 months. Moody’s is taking this prediction seriously, causing concern from investors about property values in the long term.

Yet, many investors are...

Canadian Bankers Weigh In On Real Estate Market In Canada

Those in the know now expect that Canada’s real estate market will not endure the predicted bubble, but rather will weather a softer landing. The market is still seeing a bit of a slowdown, largely due to the change in mortgage lending rules set down this past July.  But according to RBC, Royal Bank of Canada and other leading bankers a serious downturn such as that seen in the United States in 2008 is not likely.

That 2008 crash affected not only the United States’ economy but contributed to the global economic situation. Caused by an increase in mortgage rates that affected sub-prime mortgages and the resulting defaults, it was an economic disaster with effects still being felt in some places.

Canada does have a few sub-prime mortgages, but not nearly as many as in the United States. In addition, Canada’s real estate prices have seen a steady increase, with a few exceptions, one being the first few months of the 2008-2009 recession. Some of the less affluent areas of Canada also...

Larger Down Payments Sometimes Mean Higher Mortgage Rates

It would seem logical that putting down a large down payment on a property would be a smart move. As it turns out, a smaller down payment may actually save you money in the long run. Because of government mortgage default rules on insurance, it is not as much of a risk for lending institutions to front a loan to someone with a five percent down as it is to a borrower with a heftier 20 percent down payment.

It turns out that 20 percent is the magic number. Borrowers in Canada not putting down at least that amount are required to purchase default insurance on their mortgage if they are dealing with a traditional bank that is federally regulated. The cost for this insurance can run as much as 2.75 percent of the amount of money borrowed on a typical 25-year amortized loan. The loan is guaranteed by the Canada Mortgage and Housing Corporation, a Crown corporation. Another words, the federal government is backing that loan.

Secondary lenders, notes Canadian Mortgage Trends’ Rob McLister, are offering lending...

Hood Winked?

Do you have a mortgage? Then there’s likelihood you have mortgage insurance. This type of insurance is provided by the lender and not the government (CMHC insurance). The purpose of lender mortgage insurance is that if you become utterly ill or pass away before paying off the mortgage, the coverage will kick in and pay it off for you. It is intended to offer the consumer assurance that your family will not have the financial burden of a mortgage when you are deceased or gravely ill.

There’s a huge grey area when it comes to this. In this video (provided by CBC Marketplace), two families who acquired the coverage and thought they were protected, later realized that their claims had been turned down when loved ones became sick or died. In each case, the insurer claims that each party falsely filled out the required forms.

It turns out a regular visit to the doctor could be reason to deny your claim, if you don't mention it. Have you had a nurse or doctor put on a cuff to inflate on your bicep? That counts...

What To Do After You Have Been Denied A Mortgage....


Have you found your dream home but were denied a mortgage? A problem with your application doesn’t necessarily mean that you’ll be stuck paying rent for the rest of your life. There are ways of working around issues like debt; credit ratings and low income so don’t despair.

Appeal the Decision - First, find out what the issue was and rectify it. After it has been addressed resubmit your application. A little restructuring can go a long way.

Find a Guarantor - If you were denied for a second time it might be a good idea to find a guarantor. It can be a great help but the deal is only as good as the guarantor’s credit. In fairness don’t resort to this unless you have to because if you default on the loan it’s then...