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As a follow-up to our post last week regarding the new Canadian mortgage rule changes, here are more important mortgage facts for Calgarians to keep in mind.
Have you been approved for a mortgage and are waiting for the completion date to come? Well, it is not smooth sailing until AFTER the solicitor has registered the new mortgage.
Be sure to avoid these 10 Things (below) or your approval status can risk being reversed.
1. Don’t change employers or job positions
Any career changes can affect qualifying for a mortgage. Banks like to see a long tenure with your employer as it shows stability. When applying for a mortgage, it is not the time to become self-employed.
2. Don’t apply for any other loans
This will drastically affect how much you qualify for and also jeopardize your credit rating. Save the new car shopping until after your mortgage funds.
3. Don’t decide to furnish your new home or do renovations on credit before the completion date of your mortgage
This, as well, will affect how much you qualify for.
Even if you are already approved for a mortgage, a bank or mortgage insurance company can, and in many cases, do, run a new credit report before completion to confirm your financial status and debts have not changed.
4. Do not go over limit or miss any re-payments or your credit cards or line of credit
This will affect your credit score, and the bank will be concerned with the ability to be responsible with credit. Showing the ability to responsible with credit and re-payment is critical for a mortgage approval.
5. Don’t deposit “mattress” money into your bank account
Banks require a three-month history of all down payment money being used when purchasing a property.
Any deposits outside of your employment or pension income, will need to be verified with a paper trail. If you sell a vehicle, keep a bill of sale.
If you receive an income tax credit, you will be expected to provide the proof. Any unexplained deposits into your bank account will be questioned.
6. Don’t co-sign for someone else’s loan
Although you may want to do someone else a favour, this debt will be 100% your responsibility when you go to apply for a mortgage. Even as a co-signor, you are just as responsible for the loan, and since it shows up on your credit report, it is a liability on your application, and therefore lowering your qualifying amount.
7. Don’t try to beef up your application, tell it how it is
Be honest on your mortgage application. Your mortgage broker is trying to assist you, so it is crucial that the information is accurate on Income details, properties owned, debts, assets and your financial past.
8. Don’t close out existing credit cards
Although this sounds like something a bank would favour, an application with less debt available to use. However, credit scores actually increase the longer a card is open and in good standing. If you lower the level of your available credit, your debt to credit ratio could increase, lowering the credit score. Having the unused available credit, and cards open for a long duration with good re-payment is great.
9. Be aware that your spouses’ credit affects you too
Your partner’s credit can affect your ability to get approved for a mortgage. If there are unexpected financial history issues with your partner’s credit, make sure to have a discussion with your mortgage broker before you start shopping for a new home.
10. Don’t forget to get a pre-approval
With all the changes in mortgage qualifying, assuming you would be approved is a huge mistake.
There could also be unknown changes to your credit report, mortgage product or rate changes, all of which influence how much you qualify for.
Thinking a pre-approval from several months ago is valid now, would also be mistake.
Most banks allow a pre-approval to be valid for 4 months. Be sure to communicate with your mortgage broker if you need an extension on a pre-approval.
Thanks to Jodie Hoy of Dominion Lending for providing this information.
1. You Can Still Buy a New Home
The good news is that for most buyers, a home is still achievable. It may not be your dream home, but if you are entering the market or moving up, you still have options, although you may have to adjust your criteria.
2. The Stress Test
Non insured mortgage consumers (buyers with a 20% or greater downpayment) must qualify at the current rate plus 2% or the 5-year posted rate (currently 4.99%) which ever is higher. The lender needs to know that you can still maintain your mortgage at a higher rate. Buyers applying for insured mortgages have had to pass this stress test since last year. Remember, it’s not a matter of if interest rates go up, it’s a matter of when and its good to know you will be able to handle a higher interest rate.
3. Managing Your Expectations
The key take away, is that your buying power may be affected by between 15 to 25%. This means, for example, that instead of a $600,000 home, you are now looking at a $450,000 to $510,000 home.
4. First Time Home Buyers
This is the buyer who will likely be most affected by the new rule. The 1st home you were thinking of may now be a condominium, instead of a detached house.
5. Changes Are Due Mainly to The Vancouver & Toronto Markets
The rule changes were aimed primarily at cooling these two markets. A December 14th Globe and Mail article talks about the economic impact of the new mortgage rules, but does not even mention Alberta, let alone Calgary. With our economy gaining momentum the forecast is still good.
6. Albertans Carry The Most Debt Related to Assets
While this is true, Alberta is home to a younger demographic and it would make sense that, being in acquisition mode, they would carry more debt as they grow their families.
You can still refinance up to 80% of the value of the property, but you will need to pass the same “Stress Test” as noted above. Do note though, that the new stress test rules won’t apply to mortgage renewals as long as they are with the borrower’s existing lender.
8. Get 100% Qualified
Even though you got approved last year or received a “loose” pre-approval, meaning that it was not an in-depth assessment of your situation, don’t set yourself up for the disappointment of looking for, and finding your dream home, only to find out it is out of your reach. Do make sure to get a proper pre-approval from your bank or mortgage broker. Once this is done, we can help you find your home.
9. You Need a Negotiating Realtor
Now more than ever it is imperative that you have a Realtor who can get you the most home for your dollar. That is where we come in. The Realtors at The McKelvie Group have the experience and the proven ability to maximize the amount that you are pre-qualified for.
10. Start Looking Now
Change is never easy, but these new mortgage rules will become the new norm in time. However, to find the best home option for you, start looking now. The search is a bit more complex, but that is where our experience will be of value to you. We will assess your criteria and will help you find the best opportunities for you.
Call us and we’ll show you how. Use us as your resource and we’ll get you moving in the right direction.
Thank you to Jodie Hoy, of Dominion Lending for her assistance in providing this information.
CLICK ON THE IMAGE ABOVE to access our last newsletter of the year.
We sincerely wish all our clients and their families, past and present, a very Merry Christmas and a Happy New Year!
Marty “Griswold” Keough and the fine residents of Tuscany Vista Crescent have again transformed their street into an amazing Christmas light display know as Candy Cane Lane.
The idea came from a street known by the same name in Marty’s hometown of Summerside Prince Edward Island. Every year something new is added to the beautiful exterior illumination of over 16,000 lights (yes, the little lights are twinkling Clark). The whole street has joined in and created something that creates quite a wonderful and memorable stroll through the Tuscany neighbourhood.
CLICK ON IMAGE BELOW FOR A BRIEF VIDEO TOUR OF THE NEW FACILITY
Set to open on January 15th, The Shane Homes YMCA at Rocky Ridge is an amazing building, inside and out.
The NW Calgary sport and recreation complex will house the following:
– One 8-lane, 25m pool and one wave pool with a water slide, ‘lazy river’ and one on-deck hot tub
– One NHL-sized rink and one leisure rink
– Three full-size gymnasiums (university standard)
– One fully-equipped Strength and Conditioning Centre with state-of-the-art cardio equipment, free weights, plate-loaded equipment, cable machines, Olympic lifting platforms and functional training areas
– One three lane, 180-metre indoor running track
– Custom-designed indoor climbing wall
– Three functional studios for fitness classes and other activities
– The 250-seat performance theatre and multi-functional space that may be rented and used for:
• Dance Performances
• Theatre (rehearsals and productions)
• Speakers Series
• YMCA Children and Adult Programs
– Two art-making spaces, one ‘wet’ and one ‘dry’. These will provide opportunities for arts and crafts programming and, also, exhibition in a gallery space.
– Calgary Public Library will open the Rocky Ridge Library within the facility.
– There will be a 62 space full-day licensed child care. This will be operated by YMCA Calgary and available to children age 12 months to 6 years.The child care will utilize the YMCA Playing to Learn curriculum, a national YMCA curriculum that aligns with primary school benchmarks and helps children discover learning through creative play.
– There will also a Child Minding services on-site. This is a short-term babysitting service for parents to use while at the YMCA. It will be available to children aged six weeks to 8 years, and may be booked for up to 2 hours per day/child to a maximum of 3 visits per week .
– YMCA Calgary does not offer licensed before-and-after school care for children in grades 1-6. However we have specific programming and drop-in opportunities for un-parented children 8 yrs. of age or older taking place in the after-school hours.
– Food services will be available onsite. More details will be available closer the opening date.
– Both physiotherapy and massage services will be available on-site. More information on these services will be made available closer to the opening date.
– Outdoor areas will include a basketball court, skateboard park and access to pathways and nature trails.
For more information on the Shane Homes YMCA at Rocky Ridge CLICK HERE