Monday 6 March 2017

Seismic Shifts in Mortgage Market

The last 6 months have seen seismic shifts in how Canadian mortgages are done. This follows a period of about 8 years of almost continuous tightening of mortgage guidelines. The public has generally only known the tip of the iceberg of these changes.

3 Big-Picture Shifts

1. Your proof of income is more important than ever.  Long gone is the option to qualify without proof of income if the applicant had 35% down payment. Added to that is the recent introduction of the stress test. The stress test ensures that applicants have more than enough income to qualify for their mortgage.

2.  The rate of interest now depends heavily upon the down payment size.  Surprisingly, a person with 5% down payment will often get a smaller rate than a person with 20% down payment! And the person with 25% down payment will get a smaller rate than the person with 20% down payment, but probably not as small as the person paying 5% down payment. Determining interest rate will be even more complicated than that, but the examples give you an idea.

3.  Credit Score is emphasized more in determining interest rate.
High Score = Lower Interest Rates
Low Score = Higher Interest Rates
Rates have always been influenced by credit scores, but moving forward, the credit scores will play an even bigger influence upon interest rate at the individual level.

Complicated? Absolutely!

The whole process can be made easier with a trusted guide. It is the job of the mortgage broker to guide you through this maze to get you the best mortgage possible with your unique circumstances.

Please feel at ease to give me a call to have a confidential discussion about your mortgage options.






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