Turn the HOUSE you LIKE into the HOME you will LOVE.

Government restrictions on refinance guidelines have reduced the equity homeowners can access for renovations. High ratio buyers especially, in a flat market, may wait years before the house has appreciated enough that an 80% LTV refinance provides any money. If home buyers want to do upgrades, the time of purchase may be the only opportunity, for years they can add the cost of the renovations to the mortgage.

Use the Purchase plus Improvements to:

• Add a new or updated kitchen
• Develop the basement for more living space or visiting friends & relatives
• Update or replace the carpeting or maybe adding hardwood
• Add a garage or workroom
• Add a media room or “man cave”
• A new additional bathroom with maybe a jetted tub
• A new roof
• A more efficient central air or furnace system
• Add new siding, eaves or fascia
• Replace or updating doors and windows
• Add major landscaping

If the property isn’t exactly what you want: renovate, add, or upgrade it!

There are specific requirements for the purchase plus improvements program, please call to learn the details. Exceptions to the generally understood parameters are available.  Renovating up front may be your buyers best option.

What Mortgage Insurance Means for You

Mortgage insurance is an insurance policy which compensates lenders or investors for losses due to the default of a mortgage loan. Mortgage insurance can be either public or private depending on the insurer. There are three mortgage insurers-Canada Mortgage and Housing (CMHC-public), Genworth (GE-private) and Canada Guaranty (CG-private). A purchase with less than 20% down payment will always require mortgage insurance, and at times a lender will require a purchase of 20% or more down payment to be insured.

CMHC:

100% backed by the government

• Maximum $600 Billion in exposure across Canada

Genworth:

• 90% backed by the government
• Maximum $300 Billion in exposure across Canada

Canada Guaranty:

• Canadian owned by the Ontario Teachers’ Pension Plan along with National Mortgage Guaranty Holdings. Previously owned by AIG
• 90% backed by the government
• Maximum $300 Billion Exposure

Insurer Guidelines and Restrictions:

CMHC:

• CMHC will only allow one insured mortgage per person; this means a client who may have had a mortgage for 15 years that was originally insured through CMHC may not be able to co-sign for their children through CMHC if that mortgage has not since been refinanced to remove the original CMHC insurance.
• CMHC does not insure mortgages for Rental Pool Buildings or where there is a high percentage of nonowner-occupied units
• CMHC will not insure age-restricted buildings
• CMHC will consider buildings with post-tension cables or condo conversions
• Will not insure purchases $1,000,000 or higher
• 25-year amortization only

Genworth & Canada Guaranty:

• Both insurers will consider two insured mortgages, but the file must be very strong, and the properties must have good equity positions
• Both will consider insuring age-restricted buildings
• Neither insurer will consider insuring properties that have post tension cables
• They will not insure in complexes involving rental pools or where there is a high percentage of nonowner-occupied units
• Will not insure purchases $1,000,000 or higher
• 25-year amortization only

As always, if you have any questions, let me know.

The Bank of Canada has increased the qualifying benchmark rate for mortgages to 5.34% effective immediately.  This is not the actual rate borrowers are offered but the rate used to qualify high ratio mortgages and other mortgages when the contract rate plus two per cent is not used.

In most cases, this means, at maximum debt service ratios a 2% smaller mortgage compared to the current 5.14% benchmark. It is important to understand the total mortgage amount offered a borrower can vary from lender to lender. Some lenders use different maximum debt service ratios. Some lenders will apply the old benchmark with existing pre-approvals. Some lenders are using the new benchmark even for existing pre-approvals.

We always work with you and your buyers to obtain the mortgage that suits their needs.

Contact me for details or strategies to get the biggest mortgage available.