Tag Archives: mortgage renewal

Expect tougher mortgage rules by November

Here we are again, more changes to the mortgage industry are heading our way, and soon.

Home buyers may feel the pinch as banks comply to stricter rules, but what will change and when…

How it will impact the Canadian home buyer?

As a federal regulator, OSFI’s requirement will impact banks and lenders across Canada. This means buyers in all markets will feel the impact of these changes, not just home buyers in hot markets, such as Toronto and Vancouver.

Banks and mortgage lenders will pass down the extra costs of these stricter regulations to the end user. This is done by either increasing mortgage rates or implementing tougher lending requirements for those applying for a mortgage.

For the average Canadian home buyer, then, this could mean that as early as November, it will either be:
harder to get a mortgage
mortgage rates will start to rise (even slightly)
or you won’t qualify for as large a mortgage as you would’ve prior to these new rules.

When will tougher rules take affect?

This announcement of the proposed new mortgage guidelines comes after more than six months of private consultations between OSFI and the banking sector. Now the public and other stakeholders have until October 18 to submit comments before any of these new guidelines take effect. Then the implementation of new mortgage rules will be phased in—some lenders, with a fiscal year-end of October 31, will need to enforce these stricter mortgage rules starting November 1, 2016, while lenders with a fiscal year-end of December 31, will enforce the new rules as of January 1, 2017.

But don’t expect changes in the mortgage or residential real estate market to stop here. This week, it was mentioned that additional measures may be needed to manage the risks associated with the “highly charged” Vancouver and Toronto housing markets.

Unfortunately hot markets cause change, if your contemplating buying, refinancing or renewing lets rock, I’m here to help answer any questions & help you into the best mortgage for YOUR needs 🙂

What happens to your credit rating when you miss a mortgage payment?

I would just like to lead by saying, your mortgage payment doesn’t always show up on your credit report, but where it is going to bite you (if you are late on multiple payments), is at renewal time & it will hit you right in the pocket……

If you miss three consecutive payments or more in a row, it will lead to foreclosure proceedings (yuck), which is when the bank or lender starts the process of legally taking ownership of your property due to the lack of payments. Believe it or not, banks or lenders don’t want to own your home, but if the lender isn’t getting paid, it will try and sell the property in order to reduce its losses. Foreclosure shows up under the public record portion of your credit report……

You may assume that bankruptcy is the worst thing you can do for your credit; however, if you are applying for mortgage financing, going through a foreclosure is the absolute worst thing you can do for your credit. Bad consumer credit can be rebuilt fairly quickly, but very few lenders will look at providing financing for you if you have a previous foreclosure showing up on your credit report, regardless how strong your current credit is.

If you find yourself in a situation where you may not be able to make your mortgage payments, contact your mortgage lender or mortgage broker to find out what can be done. In all my years in the mortgage biz, I’ve never seen the attitude of pretending it will all go away actually work for anyone.

As always, if you have any questions about the mortgage industry, never hesitate to get in touch 🙂