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As the
first month of 2017 comes to an end Mortgage Brokers and Lenders are adjusting
to the new risk based mortgage rate pricing that came into play after the
Finance Minister changed Government backed mortgage default insurance
regulations in late 2016.
Lenders
often choose to pay for mortgage default insurance on mortgages where the
borrower was not required to pay it themselves. This method protects a lenders
book of business against credit loss, helps them package more secured mortgages
together to sell to investors and reduces the amount of capital they are
required to maintain. This method in the mortgage industry is called back-end
insuring.
The
changes have limited the mortgage profiles that lenders are allowed to insure
using Government backed insurers. Essentially the Government is intentionally passing on the risk to Lenders by implementing stricter insurance
qualifying guidelines and limiting mortgages that can
be insured to what they consider lower risk
"inside the box" mortgages.
The
onus is now on the lender to absorb more costs if a borrower defaults. In the
end costs are passed on to borrowers by lenders
applying higher rates to less secured mortgages.
If you're looking
for a mortgage in today's market your circumstances may not fit "inside
the Box" and be an insurable mortgage profile and your mortgage rate may
be higher. The following is a short list of what insurers have limited their
guidelines to:
- 25 year maximum amortizations
- Must qualify by using a rate stress test
- Maximum GDS of 39% (shelter expenses)
- Maximum TDS of 44% (all liabilities)
- No refinances
- No single unit rentals
- Purchase price must be less than $1 Million
As you can see the
insurer's list is limited making Dominion Lending Centre's lender connections
and mortgage solutions more important then ever! Mortgage Brokers have a
vast amount of mortgage options available to cover "outside the box"
uninsurable mortgage profiles. Whether your refinancing, you need an
amortization over 25 years, want to buy a single-unit rental or more we have a
mortgage for that!
Contact Kathleen Dediluke BC Mortgage Broker Professional to get started on your mortgage approval today!
