7 Nov

Shopping for a Mortgage Rate? 3 Terms you need to Know


Posted by: Doug Neufeld

There have been massive changes to the mortgage landscape in Canada over the last number of years.  In the past, all borrowers generally got the “best” interest rate.  It didn’t matter if you were buying a rental property, or how much you how for down payment, or even if you were refinancing…everyone got the same rate.


That “everyone gets the same rate” world no longer exists.  It’s been replaced by a highly regulated, and structured mortgage market.  Government rules, lender securitization, and lenders cost of funds, now play a massive part of what interest rate you’ll be offered.  Really it comes down to risk & security.


Here are the 3 differences you need to know:


  • Insured mortgages (often referred to as high-ratio mortgages) will have the lowest interest rates of all, because there is less risk and 100% government backed security on your mortgage. And because the borrower pays the default CMHC insurance premium, it’s the lowest cost loan a lender can provide.  Therefore, these borrowers will always be offered the “lowest” best interest rates.


Some features

  • Purchase of owner-occupied homes only (N/A on refinances or rental properties)
  • Purchase price must be below $1 Million
  • Maximum amortization is 25 years
  • Generally, have less than 20% down payment
  • 600+ credit score
  • Strict gov’t income qualification guidelines


  • Insurable mortgages are similar to insured mortgages, however in this case the lender pays the CMHC insurance premium to get the government backing on the mortgage. The qualifying rules are generally the same as above, with one big difference…the borrower must have more than a 20% down payment.  Because there’s an additional cost to the lender to pay for the CMHC insurance, they pass that along to the borrower in the form of a slightly higher interest rate.  Generally, your interest rate would be .05% – .20% higher than “best” rates.


  • Uninsurable Mortgages cover everything else. And that’s a lot!  Any purchase price over $1 Million; any rental property purchase; any mortgage refinance, regardless of the type of property; lower credit scores; any approval based on assets, equity or net worth; amortizations longer than 25 years.  If your mortgage application encompasses any of these features, it’s considered “uninsurable”.   Generally, your interest rate would be .10% – .35% higher than “best” rates.


As you can see this is counter-intuitive logic.  Higher Down payments = Higher Interest rates.  And yes, that’s true!  A borrower with a 5% down payment, gets a lower interest rate than a borrower with a $1 Million down payment on a $1.5 Million home.  Welcome to the NEW world of mortgages.  One more example of the “life isn’t fair” lesson my mother always tried to teach me about.

21 Feb

Legalized Marijuana and the Canadian Housing Market


Posted by: Doug Neufeld

very hot topic this year. Like it or not its a important article. Check it out from my colleague Dave

Legalized Marijuana and the Canadian Housing Market

October 17th will be an important day in Canada’s social history. It’s the day when we are going to have legalized marijuana across the country. We will be the second major country in the world to do this. How does this affect mortgage brokers like myself? When someone comes to me to obtain financing for a home purchase and the sellers have disclosed that they smoked pot in the house or grew a few plants , how will this affect their home purchase?

A few years ago, someone disclosed that their home had been a grow-op six years previously and their home insurance company cancelled their policy citing safety issues. I could see this happening with both lenders and mortgage default insurers like CMHC, Genworth and Canada Guaranty. A recent article by a member of the Canadian Real Estate Association suggested that both lenders and insurers might ask for a complete home inspection. It was suggested that sellers who have grown a few plants might want to get a head of a problem and have an inspection before they list the property. If there are any issues of mold or electrical systems that are not up to code, they can remedy this and have a quick sale.

I contacted both CMHC and Genworth Canada to find out if any policy changes are in the works. CMHC told me that there’s nothing planned beyond what is already on the books. If there’s been a grow operation it needs to be inspected and remediation done before they will insure. Genworth says that nothing has been announced as of yet. Any changes will result in an official announcement to all brokers.
Mortgage brokers may want to call their realtor referral partners and discuss this with them to see if local real estate authorities have any changes planned. If nothing else it will be good to touch base with your realtors to find out how the market is in your area.

If you are thinking about smoking pot in your home or want to grow a few plants , contact your local Dominion Lending Centres mortgage professional first to find out if this could affect your house value or sale in the future.

David Cooke

Dominion Lending Centres – Accredited Mortgage Professional

14 Feb

First Time Home Buyers


Posted by: Doug Neufeld

First Time Home Buyers

Your First Home. What a THRILLING thing that is to think about!! One of the best parts about our job is helping individuals purchase their first home. We know that the process can seem daunting at first, but we have an in-depth understanding and knowledge of what steps are required to make the process go smoothly. Follow these and you will be turning the key into your new home before you know it.

1. Find a Fantastic Mortgage Broker
Finding a mortgage broker who can help with your pre-approval process can allow you to determine the price point of home you can really afford. Finding a mortgage broker right off the bat can also give you an advantage over working with your bank:

  • Mortgage Brokers work for you, not the bank or lender
  • They have access to multiple lenders and are not limited to one single product
  • They are an expert in the field. They focus on mortgages and mortgages alone!

2. Get Comfortable With The Numbers
There are two numbers that all first-time homebuyers should keep in mind: 39 and 44. These two numbers can help you budget and determine what you can truly afford when looking to purchase a home. Why 39 and 44? Here’s why:

  • A maximum of 39% of your total income can go towards your housing costs. This will cover your mortgage payment, property tax payment, heating costs, and strata fees.
  • A maximum of 44% of your total income can go towards your housing costs and total debt payments. This will include ALL housing costs and all debt repayments (credit cards, car loans, student loans, etc.)

Now, here are a few other key numbers that can help you in your house hunting:

3. Know What Your Down Payment Needs to Be
You know the numbers, now let’s look at what you need to know about the down payment itself. First, if you have less than 20% down payment your mortgage will be insured and have insurance premiums added to your mortgage. If you are considering putting the minimum down, that would be 5% if the property is worth $500,000 or less. A down payment of 10% is required for any amount over $500,000. Here’s a quick example of what this looks like:

Purchase Price of $600,000

5% of $500,000                                   $25,000

10% of $100,000                                             $10,000

Total Down Payment:                                   $35,000

4. Take Advantage of The RRSP Home Buyers Plan
The Canadian government’s Home Buyers’ Plan (HBP) allows for first time home buyers to borrow up to $25,000 from you RRSP for a d own payment, tax-free! You are able to combine this with your partner if you are both first time home buyers you can both access the $25,000 from your RRSP for a combined total of $50,000. Certain qualifications do apply for you to use this plan, we have laid them out here for you to review.

5. Don’t Forget About the Closing Costs!
This is one so many people overlook! Closing costs are something that can add up quickly when you are purchasing a home. Here is an approximate breakdown of the funds you will need:

  • Legal Costs: $1000
  • Title Insurance: $200
  • Appraisal: $350
  • Property Transfer Tax: Pending on purchase price

An additional few facts on property tax for you to consider:

This is an approximation of what your closing costs may be, but it is always good to budget for them beforehand.

6. Have your Documents Ready to Roll
Mortgages = paperwork! There are a number of documents that you will need to have to give to your mortgage broker. This will vary depending on your employment situation and where your down payment is coming from, but here is a general list you can follow:

  • Most Recent paystub
  • Letter of Employment
  • NOA’s (2 years)
  • T4’s (2 years)
  • Down payment verification—up to 3 months of bank statements
  • Contract of Purchase and Sale (Your realtor will provide this)
  • Property Disclosure Statement (Realtor will provide)
  • if you are self-employed you may also have to show:
    o T1 Generals
    o Articles of Incorporation
    o Financial Statements

7. Start Working on Your Credit Score
Yes, your credit score does directly impact your ability to get a mortgage. Lender’s want to see that you can responsibly manage credit and debt repayment before loaning you a large sum of money to purchase a home. Your credit score will be a determining factor in the terms and rate associated with your mortgage.

Just what impacts your credit score? Good question! Here are a few things:

  • Late payments will lower your score
  • Collections, judgements, consumer proposals, bankruptcy this will lower your score
  • Exceeded limits on credit cards
  • Ideally, you will be able to show a minimum of 2 active and current trade lines
  • The longer your trade line is, the better increase in your score!
  • Lenders also like to see a minimum of $2,000 limit on your credit cards.

Understanding and using this knowledge can help make your first home buying experience a great one! Once you have gone through the pre-approval process with a mortgage broker the fun part begins! Upon you receiving your preapproval, you can begin the house hunting. From there, you can put an offer on your dream home (yay!) Once your offer is accepted, we go through the mortgage process with you and then it’s moving day for you!

This is an exciting time for first time homebuyers—we enjoy getting to help our clients go from start to finish and helping them get the keys to their first ever home. If you have questions or are looking to find out just how much you will qualify for you can check out our mortgage calculator OR you can reach out to a Dominion Lending Centres mortgage professional directly!

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional