Here is part 2 of Jake’s update!
“So. We all know that by July 1st there are some changes happening in the mortgage landscape for buyers with less-than 20% down.
- Minimum Beacon Score for ONE applicant must be 680 (up from 600)
- Income to debt will go from approx 4.8 to 4.2 (so a $100K income earner can borrow $480K today or $420K as of July 1st)
- If you have an executed signed APS by July 1st, your closing can be after July 1st of course
- Pre-construction purchases will most likely be under old rules (as usually happens)
These changes do not help first-time buyers, which will not help sellers and move-up buyers, which will not help Canadians own their homes and help build wealth. So how do we get around these changes? I’ve thought of some ideas to help out.
1. Find properties with more than one income stream.
A lot of my buyers lately are asking me about “how can I qualify for MORE money?”. Easy. Find a property with a 1 bedroom separate basement apartment in it, and voila – we can use 50% of that income to help you qualify for more money.
2. Get help from mom and dad in THREE simple ways:
Borrow against their HELOC, get to either the mortgage you qualify for OR 20% down, pay parents’ HELOC per month until year 5, where we refinance and pay them back?
OR
Get mom and dad to co-invest with you by lending you the extra down payment, and when you sell, offer them the % return on their investment.
OR
Get mom and dad to help you by co-signing for the mortgage and adding their incomes, which will bring your borrowing back up to where you can get the property you want. (mom and dad could be mom and dad, or, other related family members) Here’s another thing we are all waiting for (and as soon as I know, you will too!)
OR
There are THREE mortgage insurers in Canada. CMHC, Genworth and Canada Guaranty. The new changes are not a Ministry of Finance mandated change. They were done BY CMHC. Why does that matter? It is rumoured that Genworth and Canada Guaranty do not have to go along with these changes. I would be willing to be that 95% chance they will, but maybe not right away. Already my lenders have told me they will give all the business to Genworth and CG, so I’m hopeful that we will not see the changes from them and/or will see a delay in those changes. Only time will tell.
Also, this only affects people buying with less-than 20% down. At 20% down + it’s business as usual.
Thanks for reading and as always I welcome any questions or comments! Be sure to follow me on instagram as well where I’m starting to get a lot more mortgage content out for you and your clients (besides getting to know me better!)”
Jake
Jake Abramowicz
E: Jake@mortgagejake.comC: 416 910 4448
