Take a Read below everyone. If you're in need to refinance a conventional mortgage you may want to consider it before the new year now.
Today, the Office of the Superintendent of Financial Institutions Canada (OSFI) published the final version of its Guideline B-20. The revised Guideline, which takes effect January 1, 2018, applies to all federally regulated financial institutions.
We were pleased that OSFI agreed with our recommendation not to create a prohibition on all co-lending activities and instead clarified that the restrictions only apply to arrangements that are designed to circumvent existing laws or policies.
We are however disappointed with the decision to implement a new stress test at a 200 basis points level. We expect this will encourage more people to take shorter term mortgages, putting more borrowers at risk should interest rates rise dramatically. We believe the new qualifying rate will have negative implications for the Canadian mortgage finance market and the national economy as a whole. Following this announcement, will continue our discussions with the Ministry of Finance and the Bank of Canada about the methodology used to set the 5 year bench mark.
OSFI will be holding information seminars later this fall to discuss implementation expectations. A summary of industry concerns and OSFI's response to them can be found here.
Overview of Changes effective January 1, 2018
A new minimum qualifying rate (stress test) for uninsured mortgages will be set
The minimum qualifying rate for uninsured mortgages will be the greater of the five-year benchmark rate published by the BoC or the contractual mortgage rate +2%.
Lenders will be required to enhance their LTV measurement and limits to ensure risk responsiveness
Federally regulated financial institutions must establish and adhere to appropriate LTV ratio limits that are reflective of risk and updated as housing markets and the economic environment evolve.
Restrictions will be placed on certain lending arrangements that are designed, or appear designed to circumvent LTV limits
A federally regulated financial institution is prohibited from arranging with another lender: a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum LTV ratio or other limits in its residential mortgage underwriting policy, or any requirements established by law.
As always we will continue to advocate on your behalf and keep you updated on the latest developments as they are announced.
Here's some good Information for those considering purchasing a rental unit.
With the introduction of the Ontario's Fair Housing Plan back in April 2017, several measures included in the 16-point plan focused on the rental housing market, becoming Bill 124, the Rental Fairness Act, 2017. The new relationship structure between tenants and landlords is designed to favour the tenant, protecting them from landlord abuse both during the time of occupancy and afterwards.
The rules of the game have changed. As of September 1, 2017, landlords must follow stricter rules when it comes to evicting a tenant, or else face up to $25,000 in fines. These changes are part of the Ontario government’s new Fair Housing Plan, which included expanded rent control on all buildings and a standard lease proposal. The new rules for landlords and tenants are about evictions, making it riskier for landlords and safer for tenants.
One of the most controversial stipulations of Bill 124 relates to evictions that as of September 1, 2017, when a landlord ends a tenancy for personal use of the rental unit (for themselves or family member), landlords must provide one month's rent to the tenant or offer the tenant another acceptable rental unit.
There are two main situations in which this would apply: for example a condo owner decides to sell a unit that they are currently renting out; a condo owner decides to move into, or let a family member move into, a unit that they are currently renting out. But the law applies to any reason of “personal use” on the part of the landlord that forces the tenant to leave.
In addition, landlords must express intent and/or evidence that they will be occupying the unit for at least a year; otherwise, if they re-rent or convert the unit into a short-term rental within a year of terminating a tenancy, landlords could face a fine of up to $25,000.
These new rent control rules will have an impact on the current Agreement of Purchase and Sale and standard lease agreement. As these implications are being reviewed and scrutinized, and I hope to provide further information and updates in the coming weeks.
Here is a blog that can provide additional perspective. http://bit.ly/2fjGCzV
If a landlord decides to evict a tenant for personal use of the unit, such as moving in themselves or moving in a family member, then the landlord must do the following:
1) The landlord must pay the tenant 1 month’s rent in compensation for the eviction.
2) Or, the landlord must offer the tenant a comparable unit in the same or a different building.
3) The landlord must show an intention to live in the unit for at least 1 year upon eviction. A standard 60 days advance notice of eviction still applies.
4) If the landlord fails to follow these rules, and then re-lists, converts, or demolishes the unit within 1 year of eviction, the landlord could face up to $25,000 in fines.Above information put together by reviewing the Sources at : Toronto Real Estate Board and Condos.ca Blog.
When you in the market for a loan, mortgage, or credit card, your personal credit report is one of the primary tool lenders use to make their decision.
Did you know that 47% of credit reports are reported to have inaccurate or missing information? In some cases would have resulted in higher interest rates or even declined credit.
How can I know if I am a good credit risk?
There are many factors that affect your Canada credit worthiness. They are:
There is another way to determine if you are a good credit risk. That is by determining your debt ratio. Mortgage lenders generally won't approve your loan if your mortgage debt would exceed 30% of your income. Your total debt ratio -- including all other debts -- should not exceed 40% to qualify for a mortgage.
These debts don't include food, utilities or taxes that you pay. For these calculations, mortgage lenders look at items like credit card bills, student loans and car loans and how your mortgage would affect your overall ability to pay.
It is very important that you maintain a good credit profile. By paying your bills on time, paying off your bills in the time required and by not overextending your credit debt you can be assured a good credit standing. Avoiding bad registered items, collections and judgments will prevent warning flags arising during a credit check.
It may be very difficult to obtain credit if you have filed bankruptcy within the last seven years or else you may have to pay excessive interest rates. Reviewing your credit report annually will help detect inaccuracies, which if allowed to remain on your report may affect your credit rating.
Children are never too young to learn basic financial skills. The earlier you start, and the more you teach them, the easier it will be for them to navigate the complexities of personal finance as they grow up. While some schools are now adding financial literacy into the curriculum, there's an important role for parents to play in teaching kids how to manage their money. Here are some ways you can help your kids become financially literate.
1. Nothing in life is free. How many times have your kids asked for a new toy, with no understanding of the cost? Even young children can be taught the concept that things cost money. Let them know how much the item they're asking for costs, and compare it to the costs of other items. It won't register right away, but it will introduce the idea and give them something to think about.
2. An allowance. A great way to start teaching your children about money is to start giving them some. Help them set a savings goal. Is there a special toy they want? How much does it cost, and how much do they need to save to buy it? The allowance doesn't have to be a lot––even a small amount will help teach them the value of saving.
3. Earning their allowance. You can take this one step further, and create a special list of chores. You may want your kids to pick up their toys, do their homework, or bring their dishes to the kitchen without any specific reward, but for larger chores, consider letting them earn a token amount that they can put towards their savings.
4. Open a bank account. Now that your child is learning how to value money and save, it's probably time for them to open a bank account. Start getting them more familiar with words like compound interest!
5. Give a little (or a lot). An important lesson in life is learning that there are people who need a hand up. Now that your child is saving, don't forget to talk to them about charity, and why giving to others is just as important as saving responsibly. Talk to them about charities you support and why. Habitat for Humanity Canada is a great example, because they don't offer a handout, but a hand up. It's a smart investment too — for every $1 you donate, there are $4 in benefits to the community.
Scott McGillivray is the star of hit TV series Moving the McGillvrays and Income Property on HGTV Canada and proud supporter of Habitat for Humanity Canada. Learn more at habitat.ca/150reasonstobuild.
You've found the newly built home you've been looking for and are ready to make one of the biggest purchases of your life. But do you know how to protect your new home?
Before you sign an Agreement of Purchase and Sale, consider these tips:
• Review the APS with a real estate lawyer to ensure you understand exactly what is included in the price of the home. If you are buying a condominium, review the disclosure statement to understand which items are part of your unit and which are considered common elements. Make sure everything that is agreed upon is reflected in writing.
• If construction has not started on the home or condominium, find out when the builder will begin and how you will be notified if there is a delay. Be sure that you and your lawyer document all details regarding deposits and delayed closings or occupancy.
A standard Addendum is required to be included in the purchase agreement. It provides additional information, as well as your rights concerning delays in construction. It is important to review this document with your lawyer.
• At the signing of the purchase agreement, you will likely be required to provide a deposit for your home. Understand that deposits on freehold homes are protected up to a maximum of $40,000 by Tarion, the administrator of Ontario's new home warranty program. Condominium deposits are covered for up to $20,000 by Tarion. Deposits over $20,000 are protected by the trust and excess deposit insurance provisions of the Condominium Act, 1998.
• Ask when you will be contacted to make selections for interior and exterior finishes. Each builder has a different policy for finalizing selections.
• Ask your builder who to contact about scheduling your pre-delivery inspection and when it will take place.
• Ask about the builder's after sales service policy and who to contact should an issue arise. Ask who to contact in emergencies, too.
• Read about the warranty that comes with your new home and understand what to do if you think you have a claim.
Sign up for the MyHome, the portal where you can manage your warranty online at www.tarion.com.
A person who promises the lender she or he will repay a debt if the principal debtor defaults.
A guarantor will be requested if the clients who apply for a mortgage are unable to obtain financing by themselves. Circumstances where this could happen would include: insufficient employment history, poor history of debt repayment or un-confirmable income.
Just because someone is willing to be a guarantor does not mean the mortgage will automatically be approved. The guarantor becomes part of the mortgage application / approval process. The guarantor will have to disclose his or her assets & liabilities, income, and have a credit check done. The total 'picture' of all applicants is considered by the lender.
Once approved, the guarantor will have to sign the mortgage documents, showing his or her obligation to the lender. Before signing, the guarantor should obtain 'independent legal advice.' The guarantor should consult a lawyer who is not part of the real estate transaction, and who will explain to the guarantor exactly what his or her responsibilities will be should the primary debtor default on the mortgage.
A guarantee is a secondary obligation arising only on default by the primary debtor. A creditor (the lender) has no rights against the guarantor until the primary debtor defaults. However, as soon as the primary debtor defaults on even one payment, the lender may request payment from the guarantor. The lender does not have to notify the guarantor of the default before starting an action to enforce the guarantee.
Consequently, it is very important that you understand what you are signing if someone asks you to be a guarantor. Get legal advice from your own lawyer.
Today more and more Canadians are using mortgage brokers to guide them through the mortgage financing maze.
Firstly, RMA mortgage consultants will direct you to the home finance products with the lowest interest rates and mortgage features to suit your individual needs.
Secondly, RMA consultants will bring all major banks and many other lenders to you at once, instead of you having to go from bank to bank trying to make sense of it all.
Thirdly, we explain the loan to you in plain language, so you know you are getting a mortgage that's right for you. Finally, we will guide you away from the many potential traps in borrowing money and our service is free(o.a.c.).
Our Service is Free
All RMA mortgage consultants' services are provided with your needs as the first priority. We work for you, and the lenders but we are paid by the lenders (o.a.c.). Our income is derived from commissions paid by the chosen lender. This means we are happy to provide our clients with the professional advice and exceptional service most appropriate to your particular needs.
Finding the right mortgage and getting it!
RMA mortgage consultants work harder to find a mortgage solution for you. Today, most mortgage lenders can have very different lending guidelines. If finding an appropriate mortgage has been difficult, RMA mortgage consultants can connect you with an appropriate mortgage lender, as well as helping with the mortgage application and paperwork.
Mortgages tailored to your needs
Fixed rate, variable rate, tough credit mortgages, interest only lines of credit... mortgage choices have become more complicated as the mortgage finance market becomes more competitive. Even if you already have a mortgage, an RMA senior mortgage consultant can help you tailor a mortgage, to suit your needs...
Debt consolidation solutions will help you live better!
Stop paying credit card, personal loan or finance company rates. If you have more than three sources of personal finance you need to talk to an RMA mortgage consultant about debt consolidation. By consolidating your different debts and cards into one easy mortgage you can reduce the amount you pay each month... as well as reducing the hassle and worry. Consolidate and save today!
License # M15000256
Whether you live in a big city or a small town, the buildings around us are important markers of our national history. As Canada commemorates its 150th anniversary, make sure to explore some of the heritage buildings in your community.
Across Ontario, you'll find residential and commercial buildings that tell you a story. The Ontario Heritage Act grants local governments the authority to preserve heritage properties.
“These buildings may be significant due to their unique architectural features. Maybe they were built or designed by someone of note, or lived in by a historical figure,” says Ettore Cardarelli, president of the Ontario Real Estate Association. “What's important to note is that heritage homes may be subject to certain provisions or perks.”
For example, some municipalities may offer property tax rebate programs or grants to help owners cover maintenance and conservation costs. A heritage home's unique features may also help preserve its value, in addition to preserving a piece of local history.
If you're in the market for a heritage home, make sure to ask your Realtor about any provisions your potential home may be subject to under the Ontario Heritage Act.
Find more information at www.wedothehomework.ca.
Mortgage instructions will be sent to your lawyer from the lending institution. These instructions consist of the mortgage and property details. Your Realtor will have sent your lawyer a copy of the purchase agreement and confirmation that your deposit has been paid.
Your lawyer will then do the appropriate searches to determine what charges are listed against the property (e.g. the vendors mortgage). These must be satisfied by the vendor before title can be transferred to you. Approximately one week before your closing date, you meet with your lawyer. He or she will explain the mortgage documents to you and witness you signing them. Your lawyer will request a copy of your fire insurance on the new property, with loss payable to the lender.
Your lawyer will explain the statement of adjustments and disbursements. This statement lists the various expenditures and where the money is coming from to pay for them.
On the completion date your lawyer will forward the total amount required to the vendor's lawyer 'in trust' on the vendor's lawyer's undertaking to provide clear title to you.
Once the vendors lawyer has received the money, your Realtor will be given the go-ahead to hand you the keys.
Even when interest rates are steady, many homeowners refinance their mortgages. In some cases, an existing mortgage is coming to an end and borrowers need to renegotiate. Other reasons for refinancing include funding renovations, paying for a child's education, or buying a second property.
Too often, homeowners enter mortgage negotiations without legal advice and without understanding the deal or its implications. Getting professional advice when refinancing can help you save money and protect your interests. Here are some key things to consider:
1. Lender choice: We'll help you look around for the lender with better terms or a lower interest rate – they are negotiable.
2. Legal advice: Never sign mortgage documents without fully understanding the terms they contain. A real estate lawyer can protect your interests by explaining your obligations under the mortgage. They can also explain what the lender can do if you fail to make mortgage payments on time. Finally, a lawyer can review the documents registered on the title for the home to check for unexpected liens or fraudulent transactions.
3. Pre-payment penalties: When refinancing, it's important to fully understand the implications of any pre-payment penalties that may be triggered. If you sell before the mortgage due date, will there be a pre-payment penalty? Can the mortgage be transported free of charge to a future home? A lawyer can explain all the pros and cons before you commit to new mortgage terms.
4. Protecting your investment: Refinancing is a great opportunity to protect yourself from exposure to fraud and other risks. If you don't already have title insurance, this is the time to arrange a policy. Title insurance can provide solid protection, in case the property is targeted for mortgage fraud.
As licensed Real Mortgage Associates and members of the RMA group we are focused on providing you with top quality mortgage advice.