Advice from Bryce

SIMPLIFYING THE RECENT MORTGAGE CHANGES
The recent Government of Canada changes to Insured Mortgages seem to be causing some confusion. Below is a simple explanation of the four biggest changes that will affect most Canadian homebuyers:

1. All borrowers will have their mortgages approved at the 5 year fixed rate regardless of the term they choose for their final mortgage. As of May 28, 2010, that rate is between 5.85% and 6.10%, depending on the lender. This does not mean your mortgage will be at this higher rate – it is simply the interest rate lenders use to approve your application. For example, today the posted rate used for approval is 6.10%, but the rate offered with Cardel Financial is 4.39%. The Cardel Financial rate is the rate your actual mortgage payments will be calculated at.
2. The maximum amount that can be borrowed when refinancing a mortgage will now be 90% of the value of the home.
3. Non-owner-occupied properties (rentals) will require a minimum down payment of 20%.
4. Self-employed borrowers and commissioned income borrowers applying via the Stated Income platform (an estimate of annual income), with more than 3 years in the same business must now provide traditional proof of income (financial statements, T-4s, contracts, etc). Those who have recently become self-employed and do not have the proof of income necessary can still apply for mortgage financing but will need to have a minimum 10% down payment to qualify. Refinancing for these borrowers will now only be 85% of the value of the home.

Buyers can still purchase homes with 5% down payment and amortize the home over 35 years. These two rules/benefits did not change.
 
If you have any questions, please contact Cardel Financial.

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