Almost half of new, young homeowners have down payments of less than 20%

While a smaller portion of the overall market, high-ratio loans are more prevalent for young people

Almost half of new, young homeowners put down less than 20 per cent down on their homes, something that could make them vulnerable to economic shocks down the line.
That's one of the main takeaways from the Bank of Canada's semi-annual Financial System Review, published Tuesday, which lays out the central bank's views on the biggest risks facing Canada's economy.

• Household debt, house prices biggest risks, BOC says

One section of the report looks at the mortgage market, where the bank looked at people who got a mortgage between 2014 and 2016.
By law, anyone who puts down less than 20 per cent of the purchase price of a home faces much more stringent underwriting criteria, and must pay to have a loan insured. People who have down payments of more than that don't face as much scrutiny, because they have a slightly bigger buffer to absorb higher rates down the line.

• Mortgage insurance is about to get more expensive

Overall, less than one third of all homeowners are so-called high-ratio borrowers —  the banking terminology for people who own less than 20 per cent of the bank-appraised value of their home.
But the central bank says almost half (49 per cent) of homeowners 35 and under who bought a house during that two-year window were high-ratio borrowers.
"Households under the age of 35 represent close to half of the high-ratio borrowers, but less than one-quarter of low-ratio mortgages, because they are less likely to have sufficient savings for the minimum 20 per cent down payment," the bank said.
Owing more on one's home makes a household more vulnerable to all sorts of economic shocks, because the debt load stays the same, even if the value of the home decreases.

• Why Canadians ignore the debt warnings

Mortgage rule changes in 2016 have taken aim at this segment of the market for exactly this reason. But new rules set to be implemented in early 2018 will also tighten conditions on the other side of the market, for people with large enough down payments that they don't have to buy mortgage insurance.
While high-ratio borrowers tend to be disproportionately younger, overall, the bank notes, they are becoming a smaller and smaller portion of the market due in part to the rule changes.
Low-ratio mortgages accounted for 72 per cent of new home purchases in 2016, up from 67 per cent in 2014.

• Canadians lead the world in debt loads, OECD says

While high-ratio mortgages are inherently riskier than those with larger down payments attached to them, overall the bank says it's also noticing an increase in what it calls the "quality" of these loans — meaning the people who are getting them are better able to pay them off than they used to be.
By the bank's estimates, about half of borrowers affected by last year's stress test were able to reduce their debt-service ratio enough to qualify for high-ratio loans, mainly because they decided to buy less expensive houses in the first place.
Since the last Financial System Review, the proportion of highly indebted households — which the bank defines as those where the loan value is more than 450 per cent of the household's income — fell from 19 per cent to seven per cent of the overall market.
"While household debt relative to income continues to rise, there have been notable shifts in mortgage activity over the past year, including an improvement in the quality of new high-ratio mortgages," the bank said.

• Why Canada's property market refuses to fall

Counterintuitively, while the central bank is less worried about high-ratio loans, it is getting more worried about low-ratio ones.
"The proportion of low-ratio mortgage borrowers who are highly indebted has been trending up," the bank said. That's party because by law, any house costing over $1 million is ineligible for a high-ratio loan, which forces that person to get enough down payment cash to qualify for a low-ratio loan.
Toronto-Dominion Bank economist Brian DePratto likened the effect to a "balloon squeezing" where people forbidden from getting high-ratio loans rush to get their down payments high enough to qualify for a low-ratio loan.
And $500,000 down on a $2 million home may be a nice down payment, but ultimately the borrower still owes more money in real terms than someone who was forbidden from borrowing that much in the first place.
While concerning, the bank says new stress test rules targeting that section of the market and set to be implemented in January may help weed out worrisome debt, the same way a stress test in the insured portion did last year.
Those new rules "are expected to mitigate some of these risks over time," the bank said.

DePratto summed up the bank's view on mortgage debt loads succinctly: while they're still growing, "the Bank of Canada sees things moving in the right direction."

Credit: CBC News

Equifax Data Breach -- Here's What You Can Do Right Now

It is still unknown how many Canadians were affected by the security breach at credit-monitoring company Equifax Inc., which was revealed on Thursday, September 7. The breach could have an impact of up to 143 million people in the United States. As for Canada, all Equifax said was that the breach affected "limited personal information" for an undisclosed number of Canadians. The information stolen include: Consumers' names, social insurance numbers, birth dates, addresses, credit card information and, in some cases, driver's license numbers. The company has established a website -- www.equifaxsecurity2017.com -- where people can check to see whether their personal information may have been stolen. Consumers can also call 866-447-7559 for more information. Here are five tips to help make sure your information has not been compromised.  Check your credit report for free. You are allowed a free copy of your credit report, by request. Then you can see if there have been any credit inquiries. The free version doesn't give you your score. Monitor your credit. If after checking with the company's website, you find there has been a breach of your personal information, consider taking the company's offer for free credit monthly monitoring reports for a year  -- after the year is up there is a cost. WARNING: There has been discussion that if you choose to do this you may not be able to participate in a class action suit. Read the fine print.  If you find you have not been affected, it's still a good idea to keep an eye on your credit score, whether through paying for credit monitoring or accessing a number of free credit monitoring apps that are out there. If your monthly score drops, then it may indicate that something has happened.  Freeze your credit reports. You can freeze your Equifax account. This restricts access to your credit report, which helps prevent other credit card companies from accessing it to open new accounts. Keep an eye on bank accounts and credit card statements. Go through all your bank, retirement, and brokerage accounts, as well as your credit card statements to look for any suspicious activity. Report any suspicious charges and cancel your compromised card for a new one. Put a fraud alert on your credit. This is a free service.  You'll be contacted if someone tries to apply for credit in your name. It lasts 90 days and can be renewed.

New Mortgage Rules Starts January 1, 2018

OSFI finalizes new guidelines

Today, the Office of the Superintendent of Financial Institutions (OSFI), released revised guidelines for the mortgage industry, similar to the draft version released earlier this summer.  These new parameters will take effect January 1, 2018.

OSFI said they will be holding information sessions through the fall to discuss implementation expectations. We anticipate that lenders will provide specific guidance within the coming weeks about how they will be handling these changes and guidance around submission cut-off dates, pre-sale contracts and other nuances surrounding the changes.

Summary of OSFI’s Mortgage Underwriting Guidelines B-20 revisions:

Introduction of a Minimum Qualifying Rate (Stress Test) for Uninsured Mortgages

The new minimum qualifying rate for uninsured mortgages will be the greater of the five-year benchmark rate published by the Bank of Canada, which is 4.89% or the contractual rate plus 200 basis points.

Lenders will be required to enhance their LTV measurement and limits

Lenders must establish and adhere to appropriate LTV ratio limits that are reflective of risk and must continually update as housing markets and the economic environment evolve.

Restrictions will be placed on certain lending arrangements that are designed or appear designed to circumvent LTV Limits (ie Co-Lending)

Federally-regulated financial institutions are prohibited from arranging with another lender: a mortgage, or a combination of a mortgage and other lending products, in any form that circumvents the institution’s maximum LTV ratio – so limits in mortgage bundling.

It is important to note that these changes to B-20 are not technically required by Credit Unions. That said, in the past, adherence to B-20 has occurred by some CUs for all or some of the guidelines. Given the funding capacity of Credit Unions, there may be some changes to their policies as well.

The significant concern with these changes and the stress test was shared with OSFI. TMG Management and Mortgage Professionals Canada stressed the potential impact of these changes and provided alternative suggestions to help the regulator achieve their goals.

Client's Testimony

A note from a satisfied client..........
Siba, Edmonton, AB: I had gone to different Mortgage lenders in and out of town to find financing to buy a house and after I have been turned down everywhere I had almost given up hope. Then one day I went to this networking workshop and she happened to be a speaker there. The minute she opened her mouth I knew she was the one to get me what I wanted, it was as if God whispered into my ear and I had no doubt. Her passion, fire, and energy was exhilarating. Marg Mortgages was God sent to save the day. This lady doesn't take no for an answer she will fight for you until you get what you want. She will stay up to 0100-0200hrs at night working and communicating with you until the end. I will recommend her to my family, friends, colleagues and even my enemies. I am a true testimony. Marg Mortgage thank you very much, the community is lucky to have you and will recommend and advise anyone wanting a mortgage to utilize this lady's services. Marg Mortgages can fix your credit and get you the right mortgage!! email: info@margmortgages.ca

Marg Mortgages Credit Rebuilding Program

What is Credit

Everyday we are asked, “how credit works”. Credit is getting things first, and paying later. Credit in Canada is used for everyday purchases through to major life milestones. When it comes to large purchases, credit is essential (after all, who has a spare $400,000 in cash for a home?

Credit is used when you want to:

• Get a loan
•  Buy a house
•  Lease a vehicle
•  Get a good phone plan

•  Make travel reservations
•  Get certain jobs
•  Rent an apartment
•  Pay less interest

Can Anyone Get Credit?

We all have a credit score — some good, some not so good (some are even 0!). The trick is that you need to have a good credit score in Canada to get credit. Credit allows you to reach your goals in a more flexible way. Since building your credit score takes time and patience, now is the time to start building.

Your Credit Score is a Number that Affects You

Your credit score may look like ‘just’ a three-digit number, but it sums up your whole financial reputation. Think about it like a financial resume. This number is all about trust and determines what type of credit you can get in Canada, from a mortgage all the way down to payday loans. Your credit score also decides what conditions (like a cosigner) and interest (high or low) you will get on any credit you apply for.

If you have a history of paying lenders on time and managing your debts responsibly, you’ll have a high score! If you don’t have a history at all, or if you have a low score — it will be hard to get lenders to trust you. Our goal is to help those with no score or a low score get back into the credit game.

Have You Ever Been Denied for a Credit Card?

If you’ve been turned down for credit, don’t take it personally; it probably means your credit score was too low. Lenders do a lot of math to figure out the risk of not getting paid, based on credit scores. Unfortunately, an awesome personality doesn’t count for much in the world of credit.

Credit Building With Marg Mortgages

• No Credit Check. No money out of pocket.
• Approval in minutes!
• Clients sign up for one of our programs, ranging from $1,200-$5,500.
• We put up the program amount and hold it as collateral. As clients pay down the program they begin to build-up equity (savings), which they can withdraw.
• These payments are reported to their credit profile as an Installment Loan
• All programs are 36-60 months with fully open terms and no penalty to payout early.
• Interest on the program ranges from 15.99%
• A commitment fee is charged on each program that is rolled into the payments and paid over the first several months.
• The commitment fee must be paid before the client can cancel.
• This fee ranges from $200-$400 depending on the program size (see program summary page.

Email Marg Mortgages: info@margmortgagges.ca

If you’ve ever been denied for credit, we can help you.

YOU CAN BUY A HOUSE WITH NO MONEY DOWN

If you have a good job and want to buy a first home, but don’t have a down payment, can it be done? The answer is maybe and depends on how you answer these questions.

How's you credit score? In order to qualify for a mortgage you must have a good credit rating. Try and reduce or eliminate all outstanding credit card debt first. Cancel credit cards that you are not using.

Do not change jobs just before applying for a mortgage. The lender will want to see that you have a stable employment history. You can go to Equifax.ca to obtain a free copy of your credit score. If any information in your credit file is incorrect, take the time to get it fixed before applying for any mortgage loan.

Do you qualify for an insured mortgage? With an insured mortgage, you are able to finance up to 95 per cent of the purchase price, either through CMHC or a private mortgage insurer. You will need to have at least the remaining 5 per cent down payment, as well as approximately an additional 1.5 per cent to cover the land transfer tax, legal, moving and other closing fees.

You may also want to set some money aside to do some work on your new home before you move in. To obtain the insured mortgage, you will have to demonstrate that you have enough monthly household income to pay your mortgage as well as your household expenses. It is a good idea to try and get pre approval for a mortgage, so you know before looking how much you can afford, based on the down payment that you have.

Is it possible to buy a house with no down payment? Some lenders offer qualified buyers the entire down payment on the day of closing, if the buyer has good credit, stable employment and qualifies for the lender’s closed-mortgage rate over 5 years. This can allow you to buy a home worth up to $400,000 in most cases.

The disadvantages with these mortgages are that if you want to discharge them early, you will have to pay back a pro-rated portion of the money received. And you will probably be paying 3 per cent more interest on a monthly basis than you would if you were using a variable rate mortgage, which is popular today for most home buyers.

This extra interest will amount to more than the imputed value of the down payment over a five-year period, yet it will be offset by the fact that you get to close your purchase now, with a down payment that you currently don’t have. Other lenders offer similar “cash back” mortgages, which may cover your 1.5 per cent closing costs or more, on similar terms and conditions.

If you are contemplating a home with a basement apartment to help carry your expenses, be careful to make sure that the unit has legal zoning and complies with the local Fire Code. In addition, make sure that you notify your insurance company about this.

Finally, always have a professional home inspection done. You do not want to find, after closing, that the house requires repairs that you can’t afford.

Even if you have a low down payment, by being properly prepared, your dream of home ownership can come true in 2017.

Get your Mortgage pre-approval in 1 hour. Click below: http://www.margmortgages.ca/LookingForYourFirstHome

TOP REASONS TO WORK WITH MARG MORTGAGES

Here are several reasons to work with me

Purchasing a home is an important decision and you should be confident about your investment. I will work with you personally to offer you valuable insight throughout the process, save you time and find the mortgage that best suits your situation.

Get independent expert advice on your financial options. I am not tied to a specific lender or products so I can offer you mortgage products that will best match your specific needs. 
My only goal is to help you successfully finance your home.

I will also help you: · Save time with one-stop shopping. Instead of spending your valuable time meeting with competing mortgage lenders, I can quickly narrow down the list of lenders that will help you achieve your financial goals. I will make your comparison-shopping fast, easy, and convenient.  · I will negotiate on your behalf. Many people are uncertain or uncomfortable negotiating mortgages directly with their bank. And even if you have an existing relationship with your branch, Marg Mortgages is licensed under TMG , a mortgage brokerage that does millions of dollars of transactions yearly with a wide variety of lending institutions so I have strong lender relationships. I can use that relationship to your advantage to negotiate your mortgage to ensure you secure competitive rates and terms that benefit you. · I will ensure that you're getting the best rates and terms. Even if you've already been pre-approved for a mortgage by your bank or another financial institution, you're not obliged to stop shopping! I can investigate on your behalf to see if there is an alternative to better suit your needs. · Customization. All mortgages are not created equally, and depending on your financial goals, I will ensure the mortgage you receive helps you with those goals. Whether borrowing to purchase, renovate, or make your mortgage interested tax deductible, I can ensure that the mortgage you have helps achieve these financials goals. · From start to finish: Even after your closing goes smoothly, my job is still not finished.  I will help ensure your transaction closes on time....but after closing I am still available for all your mortgage needs. · No cost to you. There's absolutely no charge for my services on typical residential mortgage transactions. Like many other professional services, such as insurance, mortgage brokers are paid a finder's fee when we introduce dependable clients to a financial institution.
	I provide ongoing support
	Once your mortgage is signed and paperwork is complete, I am here if you need any advice on closing details or even future financing needs. I am always happy to be of assistance when you need it.