24 Jul

Self Employed? New Mortgage Rules May Help You Qualify!

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Posted by: Patricia Kirkham

Canada Mortgage and Housing Corporation (CMHC) announced changes this month aimed at making it easier for self-employed Canadians to qualify for a mortgage.

Under the new rules, which come into effect October 1st, CMHC will give lenders more guidance and flexibility to help the self employed.

Self-employed Canadians are key contributors to strong and vibrant communities, and make up about 15% of Canada’s population, says CMHC, adding that this sector often has difficulty qualifying for a mortgage as their incomes can vary or are less predictable.

Statistics Canada reports there were 2.8 million self-employed Canadians in 2017. Numbers have been steadily increasing every year with the greatest rise in self-employed women at 15% and men at a 4% increase.

The changes include CMHC providing:

  • Examples of factors that can be used to support the lender’s decision to lend to self-employed borrowers – who have been operating their business for less than 24 months, or were in the same line of work for less than 24 months – such as acquiring an established business, sufficient cash reserves, predictable earnings and previous training and education
  • A broader range of documentation options to increase flexibility for satisfying income and employment requirements when qualifying self-employed borrowers, such as a Notice of Assessment (NOA) accompanied by a T1 General, the CRA Proof of Income Statement and the Statement of Business or Professional Activities (T2125) to support an “add back” approach for grossing up income for sole proprietorship and partnerships

Traditionally, stated-income mortgage products have been available to self-employed borrowers who are unable to provide traditional income verification but have a proven two-year history of responsibly managing credit and finances.

This added flexibility for proving income and employment, and helping those who have been self employed for a shorter period of time will better streamline the mortgage process for business owners.

Have questions about your options as a self-employed borrower or your mortgage in general? Answers are just a call or email away!


*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

20 Jun

A Purchase Plus Improvements Mortgage May Be Your Answer!

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Posted by: Patricia Kirkham

Finding the right home to meet both your needs and your budget is not always an easy task.

You may find a house with the perfect layout on a great piece of property in your ideal neighbourhood, but the interior needs some major upgrades before it’s fully functional for you and your family.

Fortunately, there are mortgage products available that allow you to add renovation funds to your mortgage amount. With a Purchase Plus Improvements mortgage, you can buy a home, renovate it the way you like and pay for it all in one mortgage payment with as little as a 5% down payment.

How big are your renos?

There are two options available for this product depending on how much money you require for renovations.

First, if you need $10,000 or less, with a 5% down payment you may qualify for fully-discounted mortgage rates. For example, a $300,000 purchase would require $15,000 (5%) for the down payment if you need $10,000 or less for renovations.

Second, if you require more than $10,000, you must have a 5% down payment based on the improved value of the property, and the interest rate will typically be the lender’s posted rate minus 1%.

For instance, if you purchase a $300,000 home and want $50,000 for renovations, you need 5% of the $350,000, which is considered the improved value. The required down payment in this case would be $17,500.

This mortgage is completed in stages similar to a construction mortgage. The first advance will be for the purchase price, a second advance will be given once 50% of the renovations have been completed, and the final advance will be released once the renovations are entirely complete.

This is an excellent product that enables you to not only buy a home that’s more affordable due to required upgrading, but also allows you to customize your renovations.

Have questions about Purchase Plus Improvements options or your mortgage in general? Answers are just a call or email away!


*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

15 May

Are You Prepared for Rising Rates?

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Posted by: Patricia Kirkham

Economists are predicting that interest rates will continue to gradually rise over the next couple of years. And, while the good news is that you won’t be shocked by large increases, it’s always best to plan ahead when it comes to your mortgage product and rate.

While the Bank of Canada held rates steady last month, which is the indicator for changes in variable rates, the bond market is increasing, which impacts fixed rates.

Here’s what you need to know depending on whether you have a variable or fixed mortgage.

Variable-rate mortgage holders:

1. Review your lock-in options. It’s always best to know your options should the time come when it makes sense to lock in. (The next Bank of Canada rate announcement is May 30th.)

2. Review your discount. If you don’t have the best variable discount available, it may be worthwhile to consider switching lenders.

Locking in isn’t always the best solution, particularly if you’re making higher payments and your mortgage is below $300,000. Locking in typically means you’ll end up paying up to a 1% higher rate than you’re currently paying.

I’m available to discuss your options and what makes the most sense for your unique situation.

Fixed-rate mortgage holders:

1. If your mortgage is less than a year old, it makes sense to stay the course.

2. If you’re considering buying another property or tapping into your home equity to consolidate debt, finance home renovations, send your kids to school, etc, let’s secure a rate hold so you have peace of mind knowing we’ve locked in your rate for up to 120 days – protecting you if rates rise as predicted.

3. If you’re up for renewal this year, now’s the perfect time to talk about your options.

Have questions about variable- or fixed-rate options or your mortgage in general? Answers are just a call or email away!


*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

22 Mar

Prepayment Penalties: Banks Vs Monoline Lenders


Posted by: Patricia Kirkham

Simply stated, if you pay your mortgage off before the end of your term, you’re going to face a ‘prepayment penalty’. But there’s nothing straightforward about how that penalty is calculated when you compare banks and monoline lenders.

Monolines are dedicated mortgage lenders. While lenders such as banks and credit unions provide an assortment of financial products and services in addition to offering mortgage financing, monolines solely concentrate on mortgages. The term ‘mono’ literally means one, as in a singular focus.

Monoline lenders follow the same rules as Canadian banks, and actually help keep mortgage pricing competitive.

Most fixed-rate mortgages have a prepayment penalty that is the higher of three months’ worth of interest or the interest rate differential (IRD). IRD is based on: 1) The amount that is being prepaid; and, 2) An interest rate that equals the difference between the original mortgage interest rate and the interest rate that the lender can charge today when re-lending the funds for the remaining term of the mortgage.

Penalty calculations can vary drastically

When selecting a mortgage, it’s important to ask upfront about prepayment penalties. Let’s face it – life happens. A lot can change over a five-year period, or whatever term you select for your mortgage. If you have to break your mortgage contract before your term expires, it’s nice to know it won’t cost you a fortune to do so.

Your penalty amount will be larger the farther away you are from your renewal date.

Here’s a Monoline Vs Bank comparison example of how penalties are calculated:

I can help you decide if paying out your mortgage early makes sense for your specific situation.

Have questions about payout penalties or your mortgage in general? Answers are just a call or email away!

*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.