Kitchener Waterloo Mortgage Source

How Mortgage Brokers are Benefiting Consumers

 Most Canadians still attain their mortgage from their local Bank. Although more individuals are shopping around for better terms and rates, the majority of Canadians do not receive their best possible mortgage. By using the services of a Mortgage Broker, consumers can be confident that their interest, not the Banks, is kept at the forefront, and that they will be provided the best possible rate and terms in the market, because the services of a Mortgage Broker represent all lenders in the mortgage market.

A Canadian Institute of Mortgage Brokers and Lenders (CIMBL) survey quantifies the value that mortgage brokers add with several interesting statistics. 

Some notable points include:

• Mortgage brokers, in part, have assisted Canadians negotiate roughly 1.38% off typical posted bank rates in the last year.
• The number of Canadians using mortgage brokers has jumped 24% since 2005.
• Among those who renewed or refinanced over the past 12 months, 84% remain with the same lender, most likely a mistake given the intense competition out there.
• 88% of Canadians say they are happy with their mortgage terms.   

So even if you are in talks with your Bank about attaining a mortgage, consider comparing the Bank’s service with that of a Broker. Mortgage Brokers focus on only one financial service, Mortgages, and this focus can help save you thousands of dollars over many years and lead to much a faster pay off.

Brent Richardson

State of the Housing Market - October 2008

According to the Canadian Real Estate Association, housing markets have cooled, but have stabilized across the country over the last quarter. Despite a 6.2% quarterly decrease in home prices across Canada, prices are still up on a year over year basis. Moreover, the prices have been hit hardest in major metropolitan areas, especially in Western Canada. General feedback from realtors and mortgage brokers in the Waterloo region report that although housing activity is down slightly, we have not experienced, or are not forecasted to experience a significant housing price decline. Accordingly, Calvin Lindberg, President of The Canadian Real Estate Association states,

 "Informed buyers and informed sellers look at the facts. And the facts right now indicate the real estate resale market is stabilizing in many markets."

"There have also been a number of initiatives that will have an impact going forward, including the government’s decision to invest $25 billion in insured mortgage pools, the recent drop in the Bank of Canada rate, and the new rules reducing the maximum amortization to 35 years instead of 40," the CREA President adds. Those new mortgage rules go into effect October 15th. "The third quarter MLS® statistics and these developments are more factors showing the Canadian market is not following U.S. housing trends."

So while we are not currently enjoying the growth of the last few years, there is peace of mind for growth to resume in the mid term. Stay tuned for reporting on the local KW CMHC report of housing trends, which will be released some time in the next few weeks.

Mortgages for the Self Employed

If you are one of the more than 7 million Canadians who are either self employed or are paid on a 100% commission basis, then you may be wondering what mortgage options are available to you.

 

At one point in time, the CMHC and other mortgage insurers offered programmes that allowed the self employed to purchase a home with as little as 5% down, and prove income using alternative methods, as long as the credit score was reasonable. Unfortunately in late 2009, these programmes were cancelled, which leaves the self employed with 2 options:

 

1. Prove income using T4 and T1 General tax forms.

• In this case, you will receive the lowest market rate from almost any major lender.
• Your stated income from tax forms will be averaged over the last 2 years to determine your income going into the home purchase or mortgage refinance.
• There are a few things that can be done in order to show more income to banks if many tax write-offs are present.

2. Use alternative forms of proving income (with less or no reliance on tax forms)

• If 'low document' or alternative means of demonstrating income is the type of mortgage you wish to pursue, you will need at least 20% equity available in the home, or to put into the home.
• Rates will vary for low document mortgages from the lowest in the market to about 1.5% above the lowest market rates. There are several variables, including amount of down payment and credit, that will determine your rate.
• As long as you have 20%, and you can show some proof of business activities/ revenues, then you can get into a good mortgage at a very competitive rate - even if credit is not perfect.
• Mortgage refinancing and debt consolidation can still make good sense with low doc mortgages, even if the rate is not the absolute lowest in the market.

So although the mortgage market for the self employed wasn't what it once was given the removal of CMHC assistance, there is still plenty of opportunity for those that work for them selves to get into solid, low rate mortgages.

I am always more than happy to work with clients to help find their best possible solution on the market. Contact me, visit my site, or feel free to leave a post with a question or remark.

Brent Richardson

www.brentrichardson.ca

brent@brentrichardson.ca