Ottawa’s latest round of mortgage policies could have quite the impact on current homeowners, especially those shouldering a large amount of debt. If you have a mortgage and are planning to refinance or renew in the coming months, you could be in for a bumpy ride. The two factors that will most impact your experience? Whether or not you plan to change your mortgage and your mortgage qualifications. Continue reading
Category Archives: Refinancing my Property
Mortgage Rule Changes Not So Severe
The first round of changes to Canada’s mortgage rules were more bark than bite, according to a letter sent to the nation’s banks on Wednesday from the Office of the Superintendent of Financial Institutions. Earlier this year, mortgage experts speculated that new mortgage rules could have a dampening effect on hot real estate markets, as more and more mortgage applications would inevitably be rejected.
Draft guidelines released in March suggested that the OSFI would eliminate 100% financing using a 5 percent cashback mortgage as well as enforce stiffer regulations concerning loan-to-value ration calculations and stated income mortgages. The document also inferred that borrowers would be required to re-qualify each time their mortgage came up for renewal.
However, Wednesday’s announcement tells an entirely different story.
Half of Canadians Prefer Fixed Rate Mortgage Products
Fixed or variable? If you’re thinking about buying a home, it’s one of the most important decisions you’ll make. According to a recent poll conducted by CIBC, 50 percent of Canadian’s prefer to go with a fixed rate mortgage product – an increase of 39 percent over last year’s numbers. And while this isn’t surprising, given the convergence of fixed and variable rates over the past six months, it’s a telling sign of the times. More and more Canadians are locking in low, long term mortgage rates in anticipation of rate hikes from the Bank of Canada. Continue reading
Draft Guidelines: Residential Mortgage Underwriting Practices and Procedures
More stringent mortgage qualifications are on the way. On Tuesday, the Office of the Superintendent of Financial Institutions in Canada released draft recommendations that would impact Canada’s banks and other federally regulated lenders.
The 18 page document contained a slew of information, the majority of which make complete sense. However, there’s still great cause for concern in the financial sphere. According to this document, the OSFI is proposing a swift implementation that could shake the system off its foundations. One reputable mortgage source described the OSFI’s recommendations as a “policy-initiated free-fall”.
While we encourage home hunters to review the entire document (available via this link), here’s what best rate mortgage hunters need to know. Continue reading
Changes Coming for Mortgage Penalties
One of the easiest ways to ensure you’re getting the best mortgage rate around is to renegotiate your financing terms when interest rates are low. Which is great… except for one small problem: penalties. Banks are notorious for slapping borrowers with hefty penalties, especially those who are looking to wiggle their way out of a long-term fixed rate deal.
It used to be that borrowers could anticipate a penalty charge that amounted to approximately three months’ worth of interest at their current rate. Today, most lenders charge a penalty that is based on three factors:
- The current and past interest rates
- The outstanding balance
- The number of months left in the mortgage term
This is knowns as the Mortgage Rate Differential (IRD). Unfortunately for homeowners in search of a best rate mortgage, the IRD is now significantly higher than in the past thanks to rock-bottom interest rates. Continue reading