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Mark Herman – Calgary Mortgage Broker

New Canadian Mortgage Rules; Sept 2024

September 16, 2024 Calgary mortgage

Great news from Ottawa today on the new rules for Canadian mortgages:

  • An Increase to the Insured Mortgage Price Cap: The government will raise the price cap from $1 million to $1.5 million, reflecting the realities of today’s housing market. This change, effective December 15, 2024, will help more Canadians qualify for insured mortgages and make homeownership more attainable, especially for younger Canadians.
  • Expanded Eligibility for 30-Year Amortizations: First-time homebuyers and all buyers of new builds will now be eligible for 30-year insured mortgage amortizations. This is a crucial step in reducing monthly mortgage payments and helping more Canadians, particularly Millennials and Gen Z, achieve the dream of owning a home.
  • Increased Mortgage Competition: The strengthened Canadian Mortgage Charter now enables insured mortgage holders to switch lenders at renewal without being subject to another stress test. This will foster greater competition and ensure Canadians have access to the best mortgage deals.

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    Typical income documentation requirements – Canadian mortgage

    August 29, 2024 Mortgage Rules

    Below are the typical income documentation requirements for each type of income.

    Salaried employees & commission income

    Salaried

    Salaried and hourly employees may need to supply:

    • A job letter and a recent pay stub to show consistent salary

    If your hours aren’t guaranteed or if there is a lot of overtime, you may also be asked for a 2-year income history.

    Commissioned

    Commissioned salespeople typically need the same documents as a salaried employee except they may also need to provide:

    • 2 years of T1 Generals with corresponding NOA’s – Notice of Assessments to establish a 2-year income average.

     

    Self-employed: Incorporated & Sole Proprietor

    Incorporated

    Self-employed clients who are incorporated and can provide traditional income verification may need to supply:

    • Most current T1 General including statements of business activities. To establish a stable income, but also so a lender can see your sources of income.
    • Confirmation of no taxes owed
    • Accountant prepared company financials supported by business bank statements. To establish your company is in good financial standing and to compare the income level being pulled out of the company is sustainable.
    • Current corporate search to confirm business ownership.

     

    Sole Proprietor

    Self-employed clients who are sole proprietors and can provide traditional income verification may need to supply:

    • Most current T1 General including statements of business activities. To establish a stable income, and so a lender can see their sources of income.
    • Confirmation no taxes owed
    • One of the following: Business license/registration, trade license, or GST registrations/returns to prove business ownership/partnership

     

    Alternative provable income & other documentation

    Alternative provable income verification

    This is a proprietary, specialized approach using gross-ups and add-backs available.

    Alternative verification of income can be provided via the following documents:

    Sole proprietor/partnership

    • Most current T1 General
    • Confirmation no taxes owed
    • Recent financial statements or statement of business activities to indicate a level of income
    • One of the following: business license/registration, trade license, or GST registrations/returns to prove business ownership/partnership

     

    Incorporated or limited company

    • Most current accountant prepared financials or corporate T2s
    • Most current T1 General and confirmation no taxes owed
    • Corporate search/articles of incorporation – for business ownership
    • Six months of bank statements

    Gross-ups and add-backs approach is considered in this instance.

    Other documentation

    There are other income sources that can help your client’s application get approved.

        • Canada Child Benefit (CCB)
        • Alimony/child support
        • Government and/or private pension
        • Rental property income
        • EI benefit for maternity leave

         

        Buying a Rental property — this is the income documentation needed. Read More

    Canadian Prime Rate Drops to 4.5%

    July 24, 2024 economy

    Horray – the rates are dropping.

    We expect to see a total of 2 MORE rate reductions of 0.25% each in 2024.

    5 x o.25% reductions are expected in 2025 making the variable the better way to go right now.

    Mortgage Mark Herman

    DATA

    Encouraged by underling trends in the Canadian economy, the Bank of Canada today cut its overnight policy interest rate by 0.25% to 4.50%.

    This is the second incremental reduction we’ve seen in as many months and while both cuts have been modest, they are moving Canada toward less restrictive monetary policy.

    We summarize the Bank’s rationale for this decision by summarizing its observations below, including its forward-looking comments for signs of what may happen next.

    Canadian inflation including shelter inflation

  • Inflation measured by the Consumer Price Index moderated to 2.7% in June after increasing in May
  • Broad inflationary pressures are easing, and the Bank’s preferred measures of core inflation have been below 3% for several months and the breadth of price increases across components of the CPI is now near its historical norm
  • Shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation
  • Inflation is also elevated in services that are closely affected by wages, such as restaurants and personal care

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    Prime now 6.95% from 7.20%: BoC reduces its benchmark interest rate to 4.75%

    June 5, 2024 economy, mortgage rates

    Today, the Bank of Canada reduced its overnight policy interest rate by 0.25% to 4.75%. This welcome and widely expected decision comes on the heels of evidence pointing to a deceleration of the rate of inflation.

    SUMMARY:

    The “overnight rate” being quoted is the rate that Banks borrow from each other at, not consumer Prime, which is confusing.

    Canadian Consumer Prime has just been reduced from 7.20% to 6.95% – this only affects Variable Rate mortgages.

    Fixed rates remain unchanged because they track the Canadian Mortgage Bond Rates which are different, and similar.

    There has also been about 40 “silent” fixed rate reductions of o.o5% each in 2024 that the press did not cover.

    Mortgage Mark Herman, Top best Calgary Alberta mortgage broker specializing in 1st time buyers

     

    Below we examine the Bank’s rationale for this move by summarizing its observations below, including its all-important outlook comments that are sure to shape market expectations for the remainder of the year.

    Canadian inflation

  • Inflation measured by the Consumer Price Index (CPI) eased further in April to 2.7%
  • The Bank’s preferred measures of core inflation also slowed and three-month indicators suggest continued downward momentum
  • Indicators of the breadth of price increases across components of the CPI have moved down further and are near their historical average, however, shelter price inflation remains high

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    GIFTed down Payment now possible for New-to-Canada home buyers!!

    May 23, 2024 Mortgage Rules

    For New to Canada buyers – Expanded “GIFT-ing” is now possible for close family members!

    That’s right! As of now, May 23, 2024, buyers who are New to Canada – in Canada for less than 2 years – ARE now allowed to use /receive GIFTS for down payment from “close family members.”

    This is a big deal because it now includes; aunts, uncles, nephews, and cousins; all were not allowed to provide a “GIFT for down payment” before.

    The standard used to be only: mother, father, brother, sister, grandparent and legal guardian; and that was it.

     

    From our data that we have on on our own customers, this will help about 20% of our New to Canada files to buy a home, where they would have been shut out before.

    Mortgage Mark Herman, top best fantastic Calgary Alberta mortgage broker, specializing in First Time Buyers. Read More