Alternative Canadian Mortgage Lenders
THE ALTERNATIVE LENDING MARKET IS GROWING!
According to data compiled by CIBC World Markets (based on Statistics Canada figures), the value of loans from alternative lenders has increased by 25% this past year. In comparison, the overall growth in the mortgage market for 2014 was 4%.
As the number of alternative borrowers grows, it’s important to find a top Calgary Alberta mortgage broker that can provide customized solutions and deals with common sense lenders. We specialize in alternative lenders that have financial solutions to meet:
- Clients who don’t fit the traditional ‘A’ lending / or bank guidelines.
- Self-employed or commissioned clients with stated income.
- Salaried clients with a GDS/TDS that doesn’t meet traditional bank requirements.
- Clients with bruised credit due to extenuating circumstances.
- Clients with outstanding Canada Revenue Agency debts.
- New immigrants to Canada.
- Sophisticated residential real estate investors.
- Clients who can demonstrate a reasonable ability to make future mortgage payments.
All of our solutions are customized to fit the specific needs of the borrower—bringing them closer to their financial goals.
Call me, Mark Herman, Top Calgary Alberta mortgage broker, to talk about any of these products for your specific situation.
403-6891-4376
Tricky changes to the mortge rules
Here is one of the changes of the mortgage rules that is now in effect – called the B21 Rules.
It will be sure to cause surprise for some customers that have large Line of Credits – LOCs
How the banks are now calculating monthly payments for secured lines of credit:
- The outstanding balance (not the limit) will now be amortized over 25 years using the Bank of Canada 5-year benchmark rate to determine the monthly payment
What that means …
For the calculation of your QUALFYING INCOME – as in, the way the government says your mortgage math is done – your total balance on your LOC is now treated:
- as a mortgage
- with a 25 year amortization and
- the rate used to calculate the monthly payment is the government’s “benchmark rate” which is about 5%.
This number is now used as your payment, not what the payment actually is.
CMHC Rate Increase & More…
This is the blog version of the Winter Update 2014:
Insurer Rate Increase – Technical Details – and the B20 Rules Phase In.
1. Much to do about nothing: CMHC increases mortgage insurance.
- May 1st the new CMHC fee increase goes into effect.
- Genworth quickly followed, matching the effective date and premium increases. Canada Guaranty has not yet but is expected to increase their rates by the same amount – so rates for all will be the same but are not right now.
- To AVOID the increase:
- The purchase must be underwritten and submitted to the insurer by the bank BEFORE end of day April 30. We will still be in the Spring rush so banks may be backed up; it is important to avoid last minute rushes during this time.
- The fee is inconsequential. A $400,000 mortgage has a monthly payment increase of less than $10.
|
Down Payment |
OLD: One-time CMHC fee added to mortgage |
New fee May 1, 2014 |
|
5%(borrowed) |
2.90% |
3.35% |
|
5% |
2.75% |
3.15% |
|
10% |
2.00% |
2.40% |
|
15% |
1.75% |
1.80% |
Nowhere in the news: Very little is being discussed on self-employed borrowers without traditional proof of income. Their premiums are going up as well.
|
Down Payment |
OLD: One-time CMHC fee added to mortgage |
New fee May 1, 2014 |
|
10% |
4.75% |
5.45% |
|
15% |
2.90% |
3.35% |
|
20% |
1.64% |
1.9% |
|
25% |
1.00% |
1.15% |
|
35% |
0.80% |
0.90% |
Bottom line: for those qualifying on their tax paid income- much to do about nothing. For those needing to use self-employed “declared” income, there is a much greater premium increase.
2. More Importantly – Full Implementation of the B20 (and soon the B21) Rules
- Some of the banks are already underwriting with the new rules causing unexpected declines and delays.
- Banks are about to start using 3% of the balance for unsecured loans and credit cards as the monthly payment. Right now some are and some are not.
- Clients that have multiple properties or want to keep their existing home as a rental, to purchase another property are increasingly having a difficult time for various different qualification reasons. (rental offsets or rent added to income, secured lines used for down payment etc.)
Bottom line: Buyers that are close to the limits of the lending guidelines may no longer qualify. Many of them are self employed buyers but even the first time home buyer with a little bit of credit debt are having trouble. It is important that a buyer’s application is presented properly to the right lender and the right insurer the first time.
The Mortgages are Marvellous Advantage
Why not take advantage of the skills, years of experience, and non-biased advice of a professional, dedicated, top- broker with top-tier access to a variety of lending institutions for your buyers?
We fully pre-qualify your buyers before you go shopping: Your pre-approval is fully underwritten by a past senior bank employee. Income, down payment and credit information are in the file upfront and any wrinkles are ironed out before putting in an offer.
Mark Herman; AMP, B. Comm., CAM, MBA- Finance www.MarkHerman.ca
Katie McDowell ; Broker of Record
WINNER: #1 Franchise for Funded $ Mortgage Volume at Mortgage Alliance Canada, 2013
Mortgage Alliance w Mobile: 403-681-4376 w Secure e-Fax: 1-866-823-1279
the B20 !!
There will be lots more on THE B20 – as it is the #1 issue with getting real estate deals approved right now.
To start with, that the B20 is:
- Needs multiple financing condition extensions
- Pre-approvals collapse at the bank and with on-line or inexperienced brokers
- Seemingly strong purchasers outright and irreversibly declined
- Losing out in multiple-offer situations
- Approvals taking forever
SUMMARY
The reason you are having a tough time removing financing conditions (COF) for your deals is called “the B20” and the details are attached. Have a read to find out why. Better yet, feel comfortable suggesting your clients use 1 of Canada’s Top-10, full-time, professional, fully-independent, mortgage brokers with a Master’s Degree in Finance, who knows what these rules mean and how to get your deals done. On time.
OUR SYSTEM, proven during the ‘06 – ‘07 boom, gives you the winning edge in multiple offers most of the time. BEFORE clients go shopping we get all the docs in. They are then reviewed by our past-head-underwriter (with $18 Billion in residential mortgages written) who discusses directly with the bank underwriters. We know the deals will work BEFORE they write an offer. In multiple offers we review the file to shorten condition time and work with you to write the winning offer.
More Data – and on my blog @ http://blog.MarkHerman.ca/
New mortgage guidelines have been issued to ALL mortgage lenders by OSFI – the Office of the Superintendant of Financial Institutions – causing every lender to modify their policies which:
- Significantly restricts the LTV (Loan-to-value) and overall qualification of mortgage amounts.
- Demands significant additional scrutiny and verification of ALL client documentation – banks can no longer paper over problems like before; causing many more outright, irreversible declines.
- Causes many banks and non-professional mortgage agents to take way too long to present approvals or produce irreversible “declines” on mortgages that were not properly documented or packaged.
Using an experienced, full-time, professional, high-volume mortgage broker is the best way to ensure your deals are completed on time, the first time. Why risk an irreversible decline for your client by using any random broker?
10 Year Term – Best Ever!
10-year fixed, full-featured mortgage is @ 3.69! (Portable, Assumable, Standard 3 month payout fee) See my comments in the Calgary Sun – full article on home page of my website: http://markherman.ca