New Mortgage Rules You Need To Know
Hi everyone
By now you’ve probably heard or read in the news that the federal government is making changes to mortgage rules to ensure that Canadians don’t take on more debt. There is a lot of confusion regarding whether or not buyers will be required to provide a larger down payment or have to meet stricter qualifications. So what are these changes and how do they affect you?
There are 3 major changes you’ll need to know about:
- Qualifying at a 5 year rate
All borrowers will be required to meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter terms.
- Refinancing limited to 90% of the loan-to-value ratio
Currently, borrowers are able to refinance their mortgage up to 95% of the property value. This amount has now been reduced to 90%, in order to help homeowners maintain equity in their home.
- Minimum 20% down payment required on non-owner-occupied properties
A 20% down payment will now be required for small (ex. 1 – 4 unit) residential rental properties if the owner does not occupy the property. If the owner intends to live on the property (ie. a rental property), they will still be able to purchase the property with only 5% down.
These changes will go into effect on April 19, 2010.
For more details, visit my thread on my message board.
Buying a home in Brampton with no money down
If you’re thinking of buying a home in Brampton soon and are worried about coming up with a down payment, there is still a zero down mortgage program available for you to explore. Essentially, what you would be getting is a cash back from the lender that you would apply as your down payment.
This mortgage program is a lifesaver for those who want to take advantage of the low interest rates and brisk real estate market in Brampton, but don’t have enough cash in the bank as a down payment. The interest rate will not be as low as a regular mortgage with 5% down, but it does get home buyers into a position where they can own their own home at an affordable monthly mortgage payment.
Here are some quick details:
- A minimum of 650 credit score is required
- Maximum cash back from this program is $25,000
- Amortization is 35 years
- Mortgage is calculated on a 5 year at the posted rate (currently 5.39%)
If you’re currently renting and am considering owning a home, but don’t have the cash for a down payment, this program may be for you. Don’t let this strong Brampton real estate market pass you by!
For more details, visit my thread on my message board. If you would like to see if you can qualify for this mortgage program, leave me a comment here or email me!
Lately, I’ve been getting some inquiries regarding the option of buying a house with no down payment. In reality, there are no more ‘zero down’ mortgage programs available. However, there is a program that exists that is very similar and that can help you purchase a property with no money as a down payment.
It’s called a free down payment mortgage, and essentially the bank offers to pay your 5% down payment on your behalf when you qualify for a 5 or 7 fixed year mortgage. What will you need to qualify?
- An employment record of at least 1 year at your current job
- A credit score of at least 640
The current rate for a 5 year fixed zero down payment mortgage is 5.50%.
If you’d like more information on this program or would like to apply for a pre-approval, you’re welcome to contact me here.
Take a look around. In the U.S., the housing market is crumbling leaving some desperate home owners throwing their keys back at lenders while others are deliberately burning their houses down. Up here in Canada, the real estate market is still going strong and with recent reductions in interest rates, what does this all mean?
If there isn’t a better time than now to get more educated about mortgages, lending practices, and borrowing strategies, I don’t know when that would be. Enter MortgageFit.com.
Let’s face it, finding answers to all your questions is sometimes pretty frustrating. Either you’re given the runaround or the person isn’t qualified enough to give you an adequate response. MortgageFit boasts the world’s largest mortgage community and is comprised of knowledgeable members who can give you free mortgage advice as well as free online quotes. If you have a question on a particular topic, ask away in their discussion forum and rest assured one of their thousands of members will come to your aid. Need answers fast? The site also provides a myriad of articles and references that you can browse at your own convenience, as well as online calculators that help you quantify your needs.
What I like most about this site is that it’s powered by people. Take a quick look through their message board and you’ll find a community alive with questions, stories, and friendly chatter. If you need quick answers on mortgages, credit issues, debt, and other financial issues, I recommend checking out MortgageFit.
So you’ve finally found the perfect home or condo in Brampton, and you’re eager to take the next step in buying it… until your real estate agent asks if you’ve been pre-approved yet. Wait a second, does pre-approved mean the same thing as pre-qualified? You’ve heard both terms and now you’re confused. Is there a difference?
Yes, there is!
When you first approach your bank or lending institution about arranging a mortgage for the purchase of a house, they will ask you some basic questions in order to assess your financial capacity. You’ll be asked to give approximate figures on how much money you make, what kind debts you have as well as assets you possess, and what sort of payments you are currently making. This is to get a rough idea of how much money you may be capable of borrowing for a mortgage. Based on these approximate figures you give, the bank will either tell you that you’re incapable of carrying a mortgage, or that you are indeed able to obtain a mortgage, meaning you are pre-qualified. This pre-qualification holds no value, as it is only a quick calculation based on the numbers that you’ve given.
What most people are interested in is if you’ve obtained a pre-approval yet. A pre-approval is only given after an official application is run through a lending institution and all your finances, as well as your credit, has been verified. This is the only way that you can be given an exact dollar amount of what you can spend on a house. It’s the pre-approval that is important!
Before you even start looking at buying a new home, it’s strongly recommended that you obtain a pre-approval first. A proper pre-approval will give you peace of mind, as well as let you know exactly how much you can afford. It would be a shame if you fell in love with a house and found out afterwards that you couldn’t afford it, so get that pre-approval first!
You’ve heard it before, and you’ve seen the ads. A bank advertisement showing happy couples embracing in front of a new house with a sold sign prominently displayed on the lawn behind them, and a caption that reads “100% Mortgage Program.” But is it really possible to buy a home in Brampton with absolutely no money down?
The short answer is, YES, but…………
Before you even think of walking into the bank to sign up, ask yourself if you have the 3 following things:
- Spotless credit that has been well-established.
- By well established, I mean you will need to have at least 2 years under the belt with a major credit card company like Visa or Mastercard.
- Steady employment with at least 2 years on the job.
Even if you did qualify for 100% mortgage plan, it may not be the best plan for you. If you’re thinking of buying a house in Brampton or anywhere else, speak to your lending institution or mortgage broker about what would best suit your financial needs. ScotiaBank currently offers a zero down mortgage plan, and you can find more information right here.
Hi Niinii Unfortunately, there really isn't much you can do unless you can find someone to co-sign on the deed that has good credit. Lending institutions are looking for either a large down payment, or an employment record with a good credit score. An individual who has no down payment and bad credit history is unlikely to find any lender that will take a chance on a mortgage. Lang
You're most welcome, Meg. Glad the article was helpful. :)