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New Rule Targets HELOC Holders Seeking A Second Mortgage.


When Mortgage comes up for Renewal. 

your mortgage is up for renewal.  Many people make the mistake of renewing with their current lender.  Most of the time the lender will never offer you a competitve rate. A mortgage broker can shave thousands of your mortgage by seeking a much better rate and product. Always talk to a Mortagae Professional.

Rob Fuccenecco 250.830.8232 fugi@telus.net

www.campbellrivermortgaegbrokers.ca

Peak Mortgages - NI Mortgages


If you have a secured line of credit on you home and you want to purchase a second home that may now affect you.  Some of the lenders are now debt servicing the limit on your secured line of credit. example if you have a 200,000 secured line of credit and only own 15,000 on it,  the lenders will qualify you on the full 200,000 whether it is used or not. Many banks push lines of credits onto clients. The questions is, how can that affect you long term.  Lines of credit are getting people into a high debt situation where they are only paying the interst not the principle balance. Line of credits should be used with caution. Tempation is always there to use it, without paying the principle balance off in a timely fashion.

For more qeustions contact me

Rob Fuccenecco 250.830.8232  fugi@telus.net

www.CampbellRiverMortgages.com



Understanding Land Transfer Tax for a Newly Built Home Exemption:

Newly Built Home Exemption

 The Newly Built Home Exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home.

 A newly built home includes:

  • a house constructed and affixed on a parcel of vacant land
  • a new apartment in a newly built condominium building
  • a manufactured home that is placed and affixed on a parcel of vacant land
  • an already constructed house that is removed from one parcel of land and affixed to another parcel of vacant land, as long as the house hasn’t been occupied since it was placed on the new parcel of vacant land
  • a house resulting from the division of an existing improvement affixed to a parcel of land that was also subdivided, as long as this house hasn’t been occupied since the subdivision of the parcel
  • a house converted from an existing improvement on the land. The previous improvement couldn’t have been used as residential (e.g. a warehouse converted into apartments).

If you qualify for the exemption, you may be eligible for either a full or partial exemption from the tax.

If you paid property transfer tax when you purchased vacant land and you now have a newly built home on the land, you may be eligible for a refund of the property transfer tax you paid.

Do I Qualify?

To qualify, the property (land and improvement) transfer must be registered at the Land Title Office after February 16, 2016 and you must be:

an individual a Canadian citizen or permanent resident (you will be asked to provide your Social Insurance Number (SIN) or proof of permanent residency and your birthdate) and the property must:

  • be located in B.C.
  • only be used as your principal residence
  • have a fair market value of $750,000 or less
  • be 0.5 hectares (1.24 acres) or smaller

You may qualify for a partial exemption, if the property:

 
Rob Fuccenecco | 250.830.8232 | fugi@telus.net
Peak Mortgages - The Mortgage Centre  
 
Campbell River


GDS and TDS: One of the ways lenders decide what you can afford is based on a couple of main metrics.

GDS: Gross Debt Service Ratio: is the percentage of your pre tax income needed to pay your housing costs. Lenders will look at the monthly mortgage payments, property taxes, condo fee's and heating costs. Add that all up and divide by your gross monthly pay. If your credit ( beacon ) score is good that ratio will less then 39%.

 

TDS: Total Debt Service Ratio: Lenders will need to know how much of your income will go to covering your debts, like credit cards, lines of credits car loans, secured and unsecured debt etc...If you credit score is good the ratio is maxed at 44%. 

Rob Fuccenecco | www.CampbellRiverMortgages.com | 250.830.8232 | fugi@telus.net

Peak Mortgages

 

 

Stress Test Update:

With the new stress test in force, many people have a lot of qeustions. Please do not hesitate to contact me at anytime to discuss.

Rob Fuccenecco | www.campbellrivermortgagebrokers.ca | 250.830.8232 | fugi@telus.net

Peak Mortgages - NI Mortgages

680 11th Avenue, Campbell River BC V9W 4G6


 New Mortgage Rules - Starting January 1-2018

  Starting January 1-2018 OSFI's ( Office of the Superintendent of Financial Institutions of Canada) will introduce Guidline B20. The largest change will be qualifying clients for new purchases and refinances using the new qualification criteria for uninsured and insurable mortgages where the loan-to-value (LTV) is 80% or less. These applicants will be qualified using the greater of either:

  • The contractual mortgage rate plus an extra 2%, representing OSFI’s newly imposed ‘stress test’ rate or
  • The Bank of Canada five-year benchmark rate (regardless of term). 
For more information please contact me:
 
Rob Fuccenecco | 250.830.8232 | fugi@telus.net | www.campbellrivermortgagebrokers.ca
 
                                   Peak Mortgages - NI Mortgages 

Risks of making a purchase offer with no subjects:

Even if your income and credit is fantastic, there is always a possibility the lender or insurer will not accept the property. Some examples of why a lender will not accept the property can be the valuation, deficiency with the structure or materials in the structure, such as type of insulation, electrical, and plumbing. It is very important that buyers understand that if they cannot complete their subject free offer purchase there may be serious ramifications such a losing their deposit.  Also, they can be taken to court and sued for damages if the sellers feel they have lost out on other offers and suffered a loss due to the delay of the sale of their home. It is very important to understand that a pre-approval is only a rate hold. 

Mortgage Broker  Rob Fuccenecco

www.campbellrivermortgagebrokers.ca

Peak Mortgages -NI Mortgages   250.830.8232   fugi@telus.net

 

 

What is the Home Owner Mortgage and Equity (HOME) Partnership

 

For many British Columbians dreaming of buying their first home, the hardest step is saving for a down payment. That is why the Province is partnering with British Columbians to help make that dream come true, through the B.C. Home Owner Mortgage and Equity (HOME) Partnership program.

 

Through the B.C. HOME Partnership program, the Province is helping first-time home buyers by contributing to the amount they have already saved for a down payment with a loan that is interest-free and payment-free for the first five years.

 

How does it work

 

  • The B.C. HOME Partnership program will meet the buyer’s contribution up to 5% of the home’s purchase price, to a maximum purchase price of $750,000.
  • After five years, buyers can either repay their loan or enter into monthly payments at current interest rates.
  • Loans through the program become due after 25 years – the same length as most mortgages.

 

Requirements:

 

The B.C. Home Owner Mortgage and Equity (HOME) Partnership supports eligible First-time homebuyers. To qualify for the program, all individuals with a registered interest on title must reside in the home and:

 

  •   Have been a Canadian citizen or permanent resident for at least five years
  •   Have resided in British Columbia for at least one year immediately preceeding the date of application
  •   Be a first-time buyer who has not owned an interest in a residence anywhere in the world at any time
  •   Use the property as their principal residence for the first five years
  •   Purchase a home that has a purchase price of $750,000 or less (excluding taxes and fees)
  •   Obtain a high-ratio insured first mortgage on the property for at least 80% of the purchase price
  •   Have a combined, gross household income of all individuals on title not exceeding $150,000
  •   Have saved a down payment amount at least equal to the loan amount for which the buyer applied

 

How to apply

 

Step 1:  Get preapproval for an insured first mortgage from your financial lending institution.
Step 2:  Apply to BC Housing for the Home Owner Mortgage and Equity (HOME) partnership loan. If you are eligible, you will receive confirmation of eligibility and Homebuyer’s Kit which includes information for your Lender, Real Estate Agent, and Lawyer/Notary Public.
Step 3:  Find your home and provide the details of your planned purchase to BC Housing for approval.

 

What information is needed to apply

 

Buyers can begin gathering the documents they’ll need to submit an online application. Buyers will need:

 

  1. Proof of status in Canada and residency in British Columbia
  2. Secondary identification (must include your photo)
  3. Proof of income and tax filings
  4. Insured first mortgage pre-approval

 

Rob Fuccenecco

 

250.830.8232  fugi@telus.net    www.campbellrivermortgagebrokers.ca



Changes for All starting on October 17-2016:

On October 03-2016 Finance Minister Bill Morneau announced new mortgage rules that will take effect on October 17-2016. The government’s announcement is aimed at ensuring Canadians aren’t taking on bigger mortgages than they can afford in an era of historically low interest rates. The changes are also meant to address concerns regarding foreign buyer who purchase and flip homes in Canada.

Definitions:

High Ratio mortgage:  means a down payment of 5% but less than 20% of the purchase price requiring mortgage insurance such as CMHC.

Low Ratio mortgage or Conventional:  20% or more of the purchase price not requiring mortgage insurance

Four major changes to Canada’s housing rules:

The current rules:

Buyers with a down payment of at least 5 per cent of the purchase price but less than 20 per cent must be backed by mortgage insurance. This protects the lender in the event that the home buyer defaults. These loans are known as “high ratio” mortgages. In situations in which the buyer has 20 per cent or more for a down payment, the lender or borrower could obtain “low-ratio” insurance that covers 100 per cent of the loan in the event of a default.

The change

Increasing a mortgage rate stress test to all insured mortgages. As of October 17-2016 all new insured mortgages will need to qualify at the bench mark rate, instead of the contract rate.  Today’s benchmark rate is 4.64%. the stress test is aimed at assuring the lender that the home buyer could still afford the mortgage if interest rates were to rise.  Other aspects of the stress test require that the home buyer will be spending no more than 39 per cent of income on home costs like mortgage payments, heat and taxes known as the gross debt service (GDS). Another measure called total debt service (TDS) includes all other debt payments like car payments and credit card payments. The TDS ratio must not exceed 44 per cent.

Who it affects

This measure affects home buyers who have at least 20 per cent for a down payment but are seeking a mortgage that may stretch them too thin if interest rates were to rise. It also affects lenders seeking to buy government-backed insurance for low-ratio mortgages.

Rationale:

The government is responding to concerns that sharp rises in house prices in cities like Toronto and Vancouver could increase the risk of defaults in the future should mortgage rates rise.

The change

As of Nov. 30, the government will impose new restrictions on when it will provide insurance for low-ratio mortgages.

The new rules restrict insurance for these types of mortgages based on new criteria, including that the amortization period must be 25 years or less, the purchase price is less than $1-million, the buyer has a credit score of 600 and the property will be owner-occupied.

Who it affects

This measure appears to be aimed at lowering the government’s exposure to residential mortgages for properties worth $1-million or more, a category of the market that has increased sharply in recent years in Vancouver and Toronto.

Rationale:

Vancouver and Toronto are the two real estate markets that are of most concern for policy makers at all levels of government. These measures appear to be targeted at those markets.

The change

New reporting rules for the primary residence capital gains exemption: Currently, any financial gain from selling your primary residence is tax-free and does not have to be reported as income. As of this tax year, the capital gains tax is still waived, but the sale of the primary residence must be reported at tax time to the Canada Revenue Agency.

Who it affects

Everyone who sells their primary residence will have a new obligation to report the sale to the CRA, however the change is aimed at preventing foreign buyers who buy and sell homes from claiming a primary residence tax exemption for which they are not entitled.

Rationale:

While officials say more data are needed, Ottawa is responding to extensive anecdotal evidence and media reports showing foreign investors are flipping homes in Canada and falsely claiming the primary residence exemption.

The change

The government is launching consultations on lender risk sharing.

What it is

Currently, the federal government is on the hook to cover the cost of 100 per cent of an insured mortgage in the event of a default. The federal government says this is “unique” internationally and that it will be releasing a public consultation paper shortly on a proposal to have lenders, such as banks, take on some of that risk. The Department of Finance Canada acknowledges this would be “a significant structural change to Canada’s housing finance system.”

Who it affects

Mortgage lenders, such as banks, would have to take on added risk. This could potentially lead to higher mortgage rates for home buyers.

Rationale:

The federal government wants to limit its financial obligations in the event of widespread mortgage defaults. It also wants to encourage prudent lending practices.

 

 With the changes occurring on October 17-2016 it is more evident that interest rates will sooner or later rise-  That is a given.  What is equally important that we as professionals in our discussions with our clients, educate and ensure they understand that low debt and a good credit score is very important in ensuring you qualify for a mortgage.    Please refer to:  http://www.fin.gc.ca/n16/16-117-eng.asp

 Rob Fuccenecco | C: 250.830.8232 | F: 877.389.3844 | fugi@telus.net | www.campbellrivermortgaebrokers.ca



Improving Your Chances For Qualifying For A Mortgage

 

Active Credit
• A common misconception is that no credit is good credit. Financial institutions and insurers
base your credit worthiness on your repayment history. If you have no credit history, it will be
difficult to secure a mortgage with a co-signer or guarantor.
• Alternate credit such as cell phones, hydro bills, vehicle insurance helps when there is lack
of credit. Tip: Make monthly payments on time to show consistency.

Pay Credit on Time
• It’s not difficult in our busy lives to miss a payment or two. Tip: Set up pre-authorized
payments for cell phones, credit cards, utility bills, to avoid late payments.

Do Not Exceed Credit Limits
• Make sure you do not go over your credit limits. When a credit card is over its limit, it significantly impacts credit score. Tip: Do not go past 50% of your limit on your credit card or line of credit.

Do not close out credit cards or unsecured lines of credit.
• One third of your score comes from your credit history, therefore; as soon as you close
the old credit card, you cancel the history that has hopefully improved your credit score. Your
credit score is gauged on the following:
• 35% is based on payment history
• 30% is amount owed and available credit
• 15% is for length of credit history
• 10% is for types of credit used
• 10% is for search and acquisition of new credit and inquiries

Limit Credit Bureau Reporting
• Having your credit bureau report pulled frequently while you’re shopping for a large item
has a negative impact on your beacon score. When your credit is accessed multiple times
within a short period of time, it reflects as credit instability and lowers your credit score. Tip: Limit the number of times you allow your credit bureau report to be pulled

 August 29-2016  Rob Fuccenecco   www.campbellrivermortgagebrokers.ca

On December of 2015, the Finance Minister announced a change to the down payment requirement for insured purchases between $500,000 and $1,000,000. Currently the minimum required down payment is 5% of the purchase price for any owner occupied property or second home.  As of  February 15-2016, the minimum down payment will be 5% on the first $500,000 and then 10% of the value above $500,000.

Tip: If you’re buying a house for $600,000, you’ll now need $35,000 instead of $30,000 from your own resources. For purchasers buying properties under $500,000, there are no changes to worry about, and for purchases above $500,000 the current rules apply regardless of the closing date. Therefore, if you are planning on buying a property above $500,000 ensure you are aware the new rule. 

Rob Fuccenecco www.campbellrivermortgagebrokers.ca