This applies to both the weather and mortgage rates. The weather may have been messy this week but that soon will be a distant memory when the good temperatures arrive next week. Like wise with mortgage rates, I am thankful for BMO for having the guts to drop their rates again to all time low’s on their 5 year fix rates. Competition is good and most if not all the other banks have followed suit.
If you are doing an open house this weekend and need a finance cut sheet for your property, just send me an e-mail with the MLS# and I will do it up for you. If you have several listings just let me know and I can set up a folder for you on my dropbox ( cloud storage).
Some more info about the types of financing available through us are AAA residential loans all the ll the way to B or Sub Prime. Commercial loan types from multi-residential, commercial development, Franchise FF&E loans to factoring and equipment financing.
As always please feel free to contact me if you have any questions. I look forward to helping you close more business.
‘Effort only fully releases it’s reward after a person refuses to quit!’ Napoleon Hill
100% and 0 Down mortgages still available
The Canadian government stopped insuring 100% and 40 year mortgages through the CMHC on October 15th which was supposed to tighten mortgage lending and help avoid a US style housing crash. 100% or $0 down payment <http://www.ratesupermarket.ca/learn/mortgage/saving-for-a-down-payment/> mortgages enabled Canadians to buy homes with no money down and many believed that this type of product would cease to exist, however, there are still ways you can purchase a home no down payment as reported in the Vancouver Sun <http://www.canada.com/vancouversun/news/business/story.html?id=498d78ce-90fb-4e71-a9de-095f1bee4ab5&p=2> .
There appears to be 2 major ways that home buyers can still get 100% financing for their dream home and they are:
1. Borrowing a down payment
The maximum amount Canadian lenders can provide for a mortgage is 95% of the home’s purchase price to still qualify for mortgage
insurance, which is guaranteed by the federal government (CMHC), however, people are still able to borrow their down payment, either from family and friends or even using their lines of credit or credit cards <http://www.ratesupermarket.ca/credit_cards/> , and their mortgage will comply with the new federal rules as long as the actual mortgage is no more than 95% of the home’s value. On these mortgages the CMHC, Genworth and AIG will not insure the borrowed down payment, only the 95-per-cent balance of the mortgage.
As far as the federal finance department is concerned, if a cash-back program has the effect of leaving a loan-to-home-value of 95 per cent, “this would not be precluded under the new measures”.
2. Cash-back mortgages
Cash-back mortgages offer the borrower anywhere from 4-7% of the home’s value as “cash back” on closing. Many of the big banks still offer cash back mortgages, and say that the cash is supposed to be used for closing costs or furnishings and they specifically will not allow borrowers to use the cash-back as a down payment. However, a common practice was for people to borrow the deposit from family and friends and then pay them back straight away with the cash-back.
My lender offers include:
Scotiabank offers a “free down payment” mortgage for borrowers who haven’t had a chance to save the minimum 5%
TD Bank offers a 4% cash back mortgage
Credit Union Atlantic – 5% cash back + set up new clients with a loan to pay closing costs
Laurentian Bank – Allow 5% cash back for Down Payment
The added benefit of cash back does come with a price as these products charge a higher interest rate that will be one or two percentage points over the discounted rate borrowers can obtain for other mortgage products. For example,TD <http://www.tdcanadatrust.com/mortgages/numbers.jsp> is offering a discounted 5 year fixed rate of 6.14% while the equivalent 5 year fixed mortgage rate <http://www.ratesupermarket.ca/best_mortgage_rates/fixed_closed/> with 4% cash back is 7.2% – which equates to almost $10,000 more in payments over the course of the 5 years (not taking into account the cash back).
Brokers have mentioned that zero-down options have never been a big part of his business, so the government’s rule changes were not going to have a huge effect on the lender’s business.
Good Info for you to pass on to your clients.
Let me know if you have any questions.