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Canadian interest rates (which impact mortgage rates) have been declining for 35 years. While mortgage rates are at record lows, home buyers and those thinking of refinancing still want the best rates with the most flexible terms possible.

Changing Mortgage Rules

It used to be a lot easier to get a mortgage and buy a home in Canada or even refinance. For example, 10 years ago, Canadians could get a mortgage with a 40-year amortization period. They could also purchase a home with zero down. All that changed when the U.S. housing market collapsed in 2008.

To avoid the same fate and to protect the Canadian housing market and the real estate investments of Canadians, former minister of finance Jim Flaherty introduced a number of tighter lending rules.

For example, in 2008, the government reduced the maximum amortization period for government-insured mortgages to 35 years. The minimum down-payment for new government-backed mortgages increased to five percent and potential homeowners needed to have a minimum credit score of 620.

In 2011, as the U.S. housing market continued to suffer and the Canadian housing market picked up steam, the government tightened lending rules further. The amortization period was reduced again from 35 years to 30 years. At the same time, the maximum amount Canadians could borrow when refinancing their mortgages was lowered from 90% of the home’s value to 85%.

In 2012, further steps were taken to slow down Canada’s red-hot housing market. The amortization period was cut again, from 30 years to 25 years. The maximum amount Canadians could borrow when refinancing their mortgages was cut from 85% of their home’s value to 80%.

In 2014, the Canadian Mortgage and Housing Corporation (CMHC) discontinued mortgage products for second homes and those who are self-employed without third-party validation.

3 Hurdles Candalend.com Can Help You Clear

While all of these changes were meant to prevent Canada’s housing market from collapsing, as well as prevent Canadians from taking on too much debt, they also made it much more difficult for home buyers to actually purchase a property or refinance their properties.

Listed are three common obstacles home buyers can face when looking for a mortgage or home owners can face looking to refinance.

Low Credit Score

In Canada, the minimum credit score you need to get the best rates is 680. You also need a two-year track record of managing your debt without any serious delinquencies. A low credit score or history of missing bills is a red flag for Canada’s big banks.

There are a large number of lenders out there willing to work with those with bad credit or that have declared bankruptcy. Best of all, because the licensed agents at Canadalend.com are independent, they have access to hundreds of different lenders.

Low Income or Self-Employed

If you’re self-employed or can’t provide proof of one to two years’ worth of stable income, it could cost you. When it comes to Canada’s big banks and income, more is more.

Canada’s major lenders want to know that less than 40%–44% of your provable income goes towards debt. That can be a tall order for many Canadians, especially when you consider the average Canadian makes $49,000 annually and the average price of a home in Canada is $448,862.1

Canadalend.com has access to hundreds of different lenders—private lenders that provide mortgages to those who are self-employed, don’t have a long enough record of employment, or don’t have a big enough salary.

Flexibility

Everyone wants the best rates with the most flexible terms. Unfortunately, getting both isn’t that simple. As a result, home buyers need to consider several factors when considering a low-rate mortgage and choose the option that’s best-suited to their individual circumstances. For example, you may need flexibility, so the lowest rates may not be available to you. If you need the lowest rate, that mortgage may come with some terms you’ll need to consider. The independent agents at Canadalend.com can help you find the best mortgage with the kind of flexible rates that fit both your financial and lifestyle needs.

Canadalend.com: Helping You Get the Best Rates and Terms

Tighter lending rules have certainly made it more difficult to obtain a mortgage or refinance through Canada’s big banks. Fortunately, the lending environment in Canada has changed over the last number of years.

For starters, the experts at Canadalend.com can help you find out how well qualified you are as a borrower. Because of their expertise, they can also help you find ways to clear hurdles like having a low credit score, an uneven employment record, and the need for flexibility.

To find out what kind of mortgage you qualify for, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

Source: 
“Average house price in Canada up 9.5% to $448,862,” CBC News web site, May 15, 2015; www.cbc.ca/news/business/average-house-price-in-canada-up-9-5-to-448-862-1.3075567.

Getting married and buying a home are two major milestones. Unfortunately, according to the latest data from Statistics Canada, the average duration of marriage for those who get divorced in Canada is 13.7 years.1

If you are getting a divorce and keeping the house is an option, there are a number of different mortgage refinancing solutions you can consider and discuss with an experienced mortgage broker.

Refinancing a Mortgage in the Event of a Divorce

For most married couples, a home is their biggest asset; helping them build up equity for retirement. A home can also be the biggest asset when going through a divorce; selling it and providing both partners with enough equity for a fresh start.

Most people just presume that you need to sell a home if you are getting a divorce. You don’t. If you are in the midst of getting a divorce and keeping the house is an option, refinancing a mortgage to buy-out your spouse’s interest in the home may be your best option.

In Canada, you can borrow up to 80% of a home’s appraised value when refinancing. For example, if your home is worth $500,000, you can refinance up to $400,000. In today’s ultra-low interest rate environment, refinancing a mortgage makes a lot of sense.

Not only does mortgage refinancing allow you to buy out your spouse’s equity, refinancing can give you more flexibility. This could include refinancing at a better rate, modifying the amortization period, and even lowering your monthly payments.

There are also other options if you want to stay in your home. A home equity line of credit (HELOC) allows you to re-borrow a portion of the equity you have built up in your home. Best of all, it’s a revolving line of credit, that means you can use it whenever and however you like.

The borrowing rules on a HELOC are different than mortgage refinancing. A HELOC is available to homeowners that have at least 20% equity in their property. Other qualifications include a steady income and good credit score. With a HELOC, you can access up to a maximum 65% of your home’s value. Your HELOC and home balance cannot equal more than 80% of your home’s value.

Getting a divorce is never easy. And thinking about current mortgage rates and refinancing your mortgage may not be a top priority right now. But eventually, you will need to consider your options.

Canadalend.com: The Country’s Refinancing Leader

If you’re getting divorced and are feeling overwhelmed, the licensed, independent agents at Canadalend.com can help. They will provide you with objective, personalized mortgage refinancing advice that will help you make the best, most informed decision possible.

To review your mortgage refinancing options, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

Sources: 
1. “Marital Status Overview 2011,” Statistics Canada web site; http://www.statcan.gc.ca/pub/91-209-x/2013001/article/11788-eng.htm

With interest rates hovering near record lows and expected to stay low for the foreseeable future, you may be wondering if now is a good time to refinance and save money. If you haven’t considered the benefits of refinancing your home, you may be missing out. Not only does refinancing with lower interest rates help you save money, you can also increase your personal and/or family’s wealth.

Now the Perfect Time to Refinance?

Refinancing your mortgage is a great way to access money using the equity in your home. This could be a less expensive way to borrow money than taking out a traditional loan.

As per government guidelines, Canadians can borrow up to 80% of their home’s appraised value when refinancing through traditional sources, such as banks or credit unions. For example, if your home is worth $500,000, you can access up to $400,000 when refinancing. Or, if your home is worth $300,000, you can refinance up to $240,000. Some private lenders, however, will go up to 85% or even 90% of your home’s value. If you’re looking for a higher amount, an independent agent can help find a refinancing open that works best for you.

Why Refinance?

Canadians refinance their mortgages for a number of reasons. The most popular reason to refinance in Canada is to consolidate debt. In fact, $20.6 billion of home equity was used to repay consumer loans over the last year.1

Refinancing is a great way to consolidate debt acquired from high interest rate credit card balances and loans. That’s because the interest you pay when refinancing is significantly lower than what you’d pay with a credit card. By consolidating your debts at a lower interest rate, you can save money and bundle all of your debt into one place.

Another popular reason to refinance is to access the liquidity of homes. In 2014, $17.4 billion was refinanced for home renovation; $7.7 billion for investments; $6.6 billion for purchasing, including tuition; and $10.3 billion was used for other purchases.

If you want to reduce your monthly obligations, you might want to refinance your mortgage by selecting a longer term. While this will cost you more in interest, it will reduce your monthly payments.

Canadalend.com: The Nation’s Refinancing Leader

Mortgage rates have been cut in half over the last eight years so it continues to be an excellent time to refinance. That said, there’s a lot to consider when it comes to refinancing. With tens of thousands of dollars in potential savings at stake, it’s a decision you don’t want to take lightly.

At the same time, refinancing can be a stressful process. If you’re not given objective advice and don’t possess a full understanding of all the details of your refinancing agreement, it can be difficult to make an informed decision.

If you’re thinking of refinancing to save money, consolidate debt , or access the equity in your home, give the licensed, independent agents at Canadalend.com a call. Our comprehensive review and calculation process will help you make the most informed decision.

To find out if now is the right time to refinance, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

Sources: 
1. Marr, G., “Great news coming if you’re renewing a mortgage, you’re about to save money,” Financial Post web site, November 18, 2014; http://business.financialpost.com/personal-finance/mortgages-real-estate/great-news-coming-if-youre-renewing-a-mortgage-youre-about-to-save-money.

1. Marr, G., “Great news coming if you’re renewing a mortgage, you’re about to save money,” Financial Post web site, November 18, 2014; http://business.financialpost.com/personal-finance/mortgages-real-estate/great-news-coming-if-youre-renewing-a-mortgage-youre-about-to-save-money.

Everyone wants to get the lowest interest rate possible when getting a mortgage or refinancing. But how is your interest rate determined? And what happens if you have bad credit? There are a number of key factors that can affect your mortgage finance rate .

Factors That Determine Your Mortgage and Refinancing Rates

The Bank of Canada announced recently that it lowered its benchmark lending rate to 0.5%. It was the second time this year the central bank has dropped the rate to help kick-start the Canadian economy.1

The Bank of Canada’s overnight lending rate influences the rates commercial banks offer potential home buyers or those looking to refinance because it impacts their cost of borrowing. Banks tend to pass on any savings or costs to consumers.

Some of Canada’s big banks cut their prime mortgage rates to 2.75% immediately after the Bank of Canada said it would lower its lending rate. Just because the banks are advertising 2.75%, though, doesn’t mean that’s what every first-time home buyer will get.

In fact, many borrowers are surprised to find that the advertised rate is not necessarily the mortgage or refinancing rate they are offered. The fact is; mortgage and refinancing rates can vary day-to-day depending on a large number of factors. For example, a low credit score and high loan-to-value ratio will increase your mortgage rate. The loan size, type of home, and term length will also influence mortgage and refinance rates.

Credit Score

Your credit score is one of the first things lenders will want to look at when you apply for a loan or refinancing . Lenders price mortgages based on risk. The higher your credit score, the less of a risk you are for lenders and the greater the chances are you’ll pay your loan back on time.

Canada’s biggest credit companies use a scale from 300 to 900. To get the best mortgage or refinancing rate, many lenders want to see a minimum score of 680. Factors that negatively affect your credit score include high account balances, outstanding loans, late or skipped bill payments, even having too much available credit.

Income

Lenders that offer prime mortgage and refinancing rates will still work with a credit score under 700. But you need to show that you have a dependable source of income.

Your mortgage rate will fluctuate based on whether you have a confirmed on non-confirmable income. Lenders prefer confirmable income; a full time job with regular pay. Prime lenders will also work with non-confirmable incomes, which is common among those who are self-employed or work on commission.

Down Payment

The higher your down payment as a percentage of the value of the home, the better. A larger down payment shows the bank you know how to save money. It also means you have more at stake in the property. The less you have to put down, the higher your mortgage rate.

Equity

If you’re refinancing, lenders will increase your mortgage up to a maximum loan-to-value ratio of 85%. The more equity you have in your home, the more prime lenders are willing to lend at a good rate since it’s backed by a secure asset.

Canadalend.com: The Country’s Mortgage and Refinancing Leader

There are a large number of factors that determine your mortgage and refinancing rate . If you’re looking to step on the property ladder or are interested in refinancing, the independent, licensed professionals at Canadalend.com can help you determine what kind of loan you qualify for. They will also help you get the best rates possible.

Whether you have bad credit, have been turned down by one of Canada’s big banks, applied for bankruptcy, or are self-employed, Canadalend.com can help you secure a residential mortgage or refinancing .

If you are interested in seeing what kind of residential mortgage or refinancing rate you qualify for, contact Canadalend.com or apply online and a mortgage specialist will help set up an appointment at your earliest convenience.

Source:

“Bank of Canada lowers overnight rate target to 1/2 per cent,” Bank of Canada web site; http://www.bankofcanada.ca/2015/07/fad-press-release-2015-07-15/