26 Sep

Why Would I Want My Mortgage with a Monoline Lender?

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Posted by: Patricia Kirkham

If you’ve heard the term ‘monoline’ lender, chances are, you’ve used a mortgage broker to negotiate home financing on your behalf.

Although not as well known as banks and credit unions, monolines provide excellent mortgage solutions to meet the needs of a variety of different borrower types.

 While 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 have a great reputation countrywide and follow the same rules as Canadian banks, so you’re well protected.

Competitive mortgage marketplace
As a mortgage broker, I value monolines in the mortgage space as they offer very competitive pricing and specialized products that help me ensure I find the mortgage product and rate that best matches each client’s needs.

Monolines also help keep the banks competitive. In fact, monoline lenders often source their funds through the big banks – even ones that don’t lend directly through the mortgage brokering channel.

Monolines are frequently able to pass along better deals to borrowers because they don’t face the high overhead costs associated with branch locations.

Additionally, if you must break your mortgage early with a monoline, you’ll likely pay a lot less in penalties than if you have your mortgage placed with a major bank. That’s because banks and monolines calculate penalties differently. Early exit penalties, for instance, are typically calculated using three months’ interest or the interest rate differential (IRD) – whichever is higher.

The IRD is the penalty that can really add up with the banks. Here’s a comparison between bank and monoline prepayment penalties.

If you’re considering breaking your mortgage early – which the majority of Canadian mortgage holders end up doing on a standard five-year fixed-rate mortgage – I can help you decide if it makes sense or if you should wait out your current term.

Have questions about breaking your mortgage early, 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.

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.