Today Finance Minister Bill Morneau announced changes to down payment requirements. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from five per cent to 10 per cent for the portion of the house price above $500,000. The five per cent minimum down payment for properties up to $500,000 remains unchanged.

Homes priced at more than $1 million by law require a minimum down payment of 20 per cent. Today’s announcement therefore focuses on homes priced between $500,000 and $1 million.

In the Mortgage Professionals Canada (MPC) Fall Report, Chief Economist, Will Dunning discusses why raising the down payment could cause problems for the housing market, including this cautionary observation: “Rising prices have made it increasingly difficult for first-time home buyers to accumulate down payments. Increasing down payment requirements would, most likely, severely dampen housing demands from people who are financially well-qualified to make their monthly mortgage payments.”

MPC notes that the 10% requirement does represent a graduated approach while the Ministry of Finance commented that they believe this will only impact 1% of home purchasers.

If you are self employed and haven’t taken a mortgage in a few years, be prepared for a different process than what you are used to.  Lenders have tightened up on what they will allow and want to see that you have a viable business before approving your loan.  

Here are the most typical documents that you should have available when applying for your next mortgage:

• Last 2 years T1 Generals  – these are provided to you from your accountant and it’s the full copy of your tax return.  Include your Statement of Business Activities and any additional schedules.  
• Last 2 years Notice of Assessments – these are your personal Notice of Assessments that you get back from CRA after you file your taxes
• Confirmation that any outstanding income tax owed to CRA has been paid
• Corporate Documents – If you are incorporated, include your incorporation paperwork confirming how long you have been in business
• Last 2 years Financial Statements for your company

If you would like to know what you qualify for and how most lenders determine that, contact me directly for a consultation on how to best structure your next mortgage.  

NOA stands for Notice of Assessment.  It is an assessment that the CRA completes after personal income taxes are filed.  Once your tax return is reviewed by the CRA, they will send out the Notice of Assessment to confirm if you either have a balance due to CRA or if you are getting a refund.  This document is one of the most requested items when gettting approved for a mortgage.  Do not throw this document out, keep it filed with your tax return for the corresponding tax year. 

If you need to request these again, you can do so online with CRA if you already have My Account set up.  If not, you can sign up but then CRA will mail you a password.  It takes about 5 days to get the account set up and then you will be able to access previous tax years if needed at any time. 

Click here  to request your NOA’s 

If you need clarification, call anytime at 604-552-6190. 

Just remember, keep them and that most likely you will need to provide the last 2 years next time you need to qualify for a mortgage.

Banks allow home buyers to have a gifted down payment from an immediate family member.  Immediate family member is considered mother, father, sister, brother or grandparents.  When receiving a gift from a family member, the funds must be deposited into the home buyers bank account 15 days before closing of the mortgage.  Once funds have been deposited into your account, you would provide a bank statement and a gift letter from the bank that is doing your mortgage.  Each bank has their own form. 

Be reminded that the amount written on the letter must be exactly the same (to the penny) as the amount deposited into your bank account. 

Once you have the gift letter signed by your family member and your bank statement printed out, give those copies to your mortgage broker. 

If you have any questions on gifted down payments, contact me at the office at 604-552-6190 or email support@primexmortgages.com

Be reminded that if you are purchasing a home, all banks require a 90 day history of bank statements or investment statements confirming the funds have been in your account for the past 3 months.  If there are deposits over $2000, be prepared to provide further paper trail to those deposits.  If you are getting a gift from a family member that is helping towards down payment, then you will need a gift letter signed by your immediate family member.  See the next blog post on Gifted Down Payments. 

Other reminders on down payment confirmation, you can use online statements providing they have your name on them and not just an account number. 

If your down payment funds are not in a Canadian account, this could pose a problem.  Down payment requirements in Canada are required to be in a Canadian account for 45 days prior to funding (closing of the mortgage) 

If you ever have questions on down payment confirmation, easiest thing is to contact us here at the office.  604-552-6190 or email me at support@primexmortgages.com

Canada’s three most watched real estate boards reported January results last week. Vancouver saw strong sales and price growth and a reduction is listings which increased competition among buyers while Toronto also saw strong sales and continued rising prices but with an increase in listings which provided buyers with more choice. In Calgary, prices have so far held on to most of the gains made in 2014 but many buyers are waiting for economic conditions to stabilize before proceeding. This caused a sharp drop in sales volumes in January and a surge of new listings which may create downward pressure on prices.

CMHC published its latest Housing Market Outlook last week which calls for a slight reduction in housing starts, stable resale volumes and annual average price gains of about 1.5% over the next two years.

Statistics Canada released January employment data on Friday which showed that the Canadian economy created more than 35,000 jobs for the month, pushing the unemployment rate down to 6.6%. The US economy posted another strong month, creating 257,000 jobs in January.

The benchmark government of Canada five year bond yield ended the week at 0.79%, up from 0.62% the previous week.

Last week brought little in the way of new housing market data but there was no shortage of economic news which was important for the Canadian real estate and mortgage markets.

After the Bank of Canada’s surprise rate cut on January 21st, Canadian banks lowered their Prime rates to 2.85%, passing on to borrowers only part of the cut to the Bank Rate. Canadian bond yields plunged sharply last week with the benchmark five year yield ending the week at 0.62%. The ten year yield closed the week at 1.27% and the thirty year yield closed below 2%. The market appears to have already “priced in” another Bank of Canada rate cut. The Bank’s next meeting date is March 4th.

Statistics Canada released revised December and 2014 year-end data last week. The Canadian economy created only 121,000 jobs last year – 65,000 fewer than was initially reported. The year-end unemployment rate was revised upwardly from 6.6% to 6.7% as a result. 

Statistics Canada also reported November GDP results last week and that news was also disappointing as the Canadian economy shrank 0.2% from October. Weakness in the energy sector and in manufacturing output accounted for the contraction

Canada’s major real estate boards will report January sales data this week. 

It’s always asked if one should consider a refiance or wait for their current term to mature.  Here’s a few tips to help you decide:

*If your current mortgage rate is more than .50% higher than todays current rates

*If you have equity in your home and high interest debt that you are no where near paying off

*If you need access to funds that are at high interest rates resulting in high monthly payments

*If you need access to funds to purchase investments or complete renovations

*If you need an improvement to your monthly cash flow because your bills are too high and need to consolidate

Those are all very common reasons why one will refinance so if you think you would like to explore options, contact me and I will do a free analysis to tell you if it makes sense or not. 

Get Pre-Qualified FIRST!  – Before you even start looking at homes, ensure you are pre-qualified by a mortgage broker.  This way you get advice, knowledge and experience from someone that has access to more than just one bank.

Get your Finances in order – At this point you will want to pay down as much consumer debt as you can!  Buying a home with all debts racked or near limit is not how you want to start home ownership.

Get your Documents in order – This is when you want to start to gather what your mortgage broker told you that you’ll need.  If you do this before you make your offer, then it will be less stressful during your subject removal period.

Get your Budget in order – Ensure you know what your budget is so that you can account for your new mortgage payment and property taxes as well as strata fees if you are looking at a condo. 

Get your Partners in order – Work with people that you trust, have experience and knowledge about the entire process and are committed to working tirelessly to ensure you have the best home buying experience.  There’s always bumps but you will want people who have your best interest at heart.

I have helped hundreds of home owners with their mortgages and worked with many people for months and in some cases years while they shop for their home.  Even if you are thinking about getting into the market, call now, it’s never too early.  I will personally look after your file from start to finish and can be reached at 604-729-7940.

If you have questions about your BC Assessments, check out the FAQ here. 

http://www.bcassessment.ca/Documents/Assessment%20Roll%20Information.aspx