If you are looking to purchase a property and are having frustrations in qualifying, there is a good chance part of the reason lies behind the Trudeau lead Liberal Government’s implemented new mortgage lending rule changes.
The Office of the Superintendent of Financial Institutions (OSFI) has implemented 3 new mortgage rule changes starting January 1, 2018 under the B20 lending guidelines:
Non insured mortgage consumers (buyers with a 20% or greater down payment) must now qualify using a new minimum qualifying rate. The minimum rate will be the greater of the five-year benchmark rate published by the Bank of Canada or the lender contractual mortgage rate +2.0%.
For a high ratio insured mortgage, buyers with a less than 20% down payment) must now qualify using the Bank of Canada Benchmark qualifying rate, currently at 5.14%.
The First set of rule changes affected first time home buyers the most, since most first time home buyers will have less then 20% downpayment available.
The latest set of rule changes impact repeat homebuyers and higher income customers purchasing average and higher priced executive properties most – since those are also the clients that you can expect to have a 20% or more downpayment already.
When it comes to qualifying for a mortgage: A borrowers income, credit score, downpayment amount, and debts/liabilities are they main factors parts used to determine what your maximum price point is, and how much you qualifying for a mortgage.
Any of the following and combination of the following can increase the maximum mortgage loan amount and purchase price:
- Increasing your income.
- Having a clean, strong and thick credit history with a minimum beacon score of 680.
- Having no outstanding debts/liabilities in the form of loans, credit cards, unsecured lines of credit, secured home equity lines of credit and leases.
- Increasing your downpayment amount with owned or immediate family gifted funds, not borrowed funds.
- Purhcase a multi unit owner occupied rental property.
- Obtain a strong family member co-signer.
- Consider a pooled mortgage.
If you have been pre-approved somewhere, and already maxed out your pre-qualification purchase limit with your income, debts and downpayment options as noted before, and your are still short of where you need to be to get into your dream home – contact an experienced mortgage broker.
An experienced Mortgage Broker is still able to get you approved using the old non OSFI-B20 guidelines of the mortgage contract rate to get you qualified for more using select Credit Union lenders.
Here are some other questions you need to ask yourself and auto upon:
Have you been pre-approved and are not totally satisfied with the service and results received?
Have you been pre-approved and are not 100% certain you are getting the best deals and lowest rates?
Take a quick minute to connect with your iMortgageBroker at Dominion Lending Centres. A second opinion could benefit you immensely!
Our goal is to assist you with approval at a higher price point if needed, and we also strive to provide you with service excellence, better deals and lower rates to ensure your best interest is protected.