The Lender’s Equations: How Much Mortgage will you Qualify for?

GDS and TDS debt service ratios.

Knowing how much you can reasonably, comfortably and responsibly contribute to home ownership is paramount in your making a wise and sound investment on your Canadian property. The big four factors that generally contribute to this mortgage amount are:

  1. Monthly income generated
  2. The amount you can contribute to your down payment
  3. The mortgage interest rates and term you qualify for
  4. Other financial commitments or debts you are obliged to pay

Lenders basically use two rules to determine the mortgage you are eligible to be funded to receive, in addition to examining your credit history and FICO score:

  1. Gross Debt Service Ratio (GDS)
  2. Total Debt Service Ratio (TDS)

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Mortgage calculators can help homeowners pay off mortgages before the average age

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A poll found that the average age a Canadian person will be before paying off their full mortgage is 57, according to St. Lawrence EMC. This is up a few years compared to age 55 a similar poll conducted in 2012 found. Canadians are making positive changes to speed up mortgage payments, but it may actually be their non-mortgage debt that determines how quickly they can become mortgage free.

St. Lawrence EMC said that the poll found that residents in British Columbia had the longest repayment expectation at 59 years, and 50 percent of Canadians that own homes said since they first took out their mortgage, their non-mortgage debt has increased. Canadian homeowners also said that lack of funds keeps them from making lump sum payments. Continue reading

Canadians more optimistic regarding household debt

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A report from PricewaterhouseCoopers spotlights new trends in Canadian views on debt, as well as the impact of mortgage restrictions on the real estate market.

Data from The Tide Turns: Canadians, Debt and Retail Lending study shows that more Canadians are comfortable with the amount of debt they're carrying, and they're also more focused on reducing it. Of 1,228 Canadians surveyed, 57 percent felt their debt level was about right. This marks a decrease from 59 percent during the previous year.

Meanwhile, 66 percent of respondents indicated that they plan on reducing their debt this year. This represents a 3 percent increase from last year.

Additionally, Canadians remain optimistic regarding the economy and their own financial situations. More than half (55 percent) of respondents said they think the nation's economy will remain stable or grow. Nearly half (46 percent) believe their income will rise over the next five years. Continue reading

CMHC consumer survey sheds light on mortgage process

When evaluating the mortgage market, one of the best ways to understand how the industry is faring is to look at the ways consumers are going about the process of finding a mortgage. The manner in which borrowers react to rules and regulations, use various tools to search for mortgage information (including lender websites and mortgage calculators) and whether or not they choose to use a mortgage broker, are key indicators of the health of the overall market.

Recently, the Canada Mortgage and Housing Corporation (CMHC) released a survey that revealed some of that information, and its results serve to shine some light on how borrowers feel about the mortgage process in 2013.

Obviously, the internet plays a huge role in how people research mortgage options. The report states that 63 percent of consumers searched for information about mortgages online. On top of that, 84 percent of consumers researched mortgage rates online. While that already represents a large majority, it is highly likely the number will continue to grow. That means lenders and brokers who haven't already put a lot of work into developing their online footprint are far behind the curve, and those who already have put in that effort will need to continue to do so in the future. Continue reading

Over Half of Canadian Retirees Are in Debt, but That Doesn’t Have to Include You

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A recent poll done by CIBC and Harris/Decima has found that 59% of Canadian retirees are still in debt. Worse yet, the poll finds that 55% of people that carry debt into retirement have seen their debt levels either increase or remain unchanged over the past year.

As you can imagine, it only becomes more difficult to repay your debt once you have lost the bulk of your income due to retirement. So it stands to reason that every effort should be made to repay your debt before retirement, right? Easier said than done, of course, but it is possible. The earlier you start paying down your debt the better, but there are options, even if you are on the cusp of retirement. Continue reading

The Benefits of CanEquity’s Mortgage Calculator

For many home buyers, figuring out how much they can afford is an essential part of purchasing property. While creating household budgets and accounting for debt obligations can be helpful when it comes to analyzing finances, determining the costs of home loans can be more complicated. Fortunately for these individuals, CanEquity has recently upgraded its mortgage calculators, refining them with client feedback to make them bigger, better and more beneficial.

It's easy to understand why CanEquity's mortgage calculator was rated the best by The Globe and Mail, as well as why it's used by both mortgage lenders and brokers. Continue reading

Online is the new frontier for mortgage hunters

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For one-third of Canadians, finding the right mortgage is as easy as clicking a mouse.

According to a new survey from Canada Mortgage and Housing Corporation, almost one-third of Canadians do all their mortgage research online, proving that the internet is as indispensable to prospective borrowers and lenders as it is to iTunes junkies and Netflix aficionados. 

In fact, mortgages have become the fastest-growing search term on Google.

David Resnick, head of financial services at Google Canada, spoke with Canadian Mortgage Trends about the topic.

“Mortgages are the fastest-growing sector in financial services by far,” Resnick said. “The number of Canadian queries related to mortgage products and services is up 60 percent year-to-date.” 

Search terms included “mortgage rates,” “first-time homebuyer” and “new mortgage rules.”

Searches for “mortgage calculator” even surpassed searches for “Lady Gaga.” Sorry, Gaga, it seems that mortgages are the hot new trend in town. Continue reading

Preparing for your first mortgage

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Canadian mortgage rates are low and housing prices are softening from province to province. But before running off to see the mortgage broker, Canadians entering the housing market for the first time should ask themselves whether they can afford a new home.

There are a number of steps prospective first-time buyers should take to assess their financial readiness before committing to home ownership, and being aware of the different aspects involved in qualifying for a loan and financing mortgage payments can start consumers off on the right track, according to M&I, part of BMO Financial Group, parent company of the Bank of Montreal.

The first thing potential homeowners should consider is how much of their income will be spent on housing. Between mortgage payments – which include interest and insurance – and property taxes, the costs can add up. One good rule of thumb is to keep the ratio of mortgage debt to income under one-third.
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Report: Housing market stable in most cities

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A new report finds housing market trends in most cities remained relatively stable over the month of July as many buyers continued to use mortgage calculators to see the advantage of low rates.

According to the Conference Board of Canada, while home resales dropped in the majority of the 28 markets surveyed, just five of those declines were more than 5 percent. In addition, sales led their year-ago figures in 23 areas.

New listings showed mixed gains, with the number of new homes for sale increasing in 13 areas but falling in 15. However, just three cities saw fewer home listings than in July 2010.

The leveling off of sales trends in those areas reduced monthly price gains in 16 of 28 markets. Compared to last year, home values are up in 20 of those areas. Continue reading

How to Calculate Mortgage Penalties

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There are numerous good reasons as to why mid-term you may be considering the option of breaking your mortgage. You may have found yourself in need of extra finances, have located a much better rate, are aiming to consolidate high interest debts, are interested in early renewal or are paying out the balance of your home loan early.

Before you make your decision, you will need discuss the option with your mortgage broker and weigh the mortgage penalty fee against your potential future savings.

The Mortgage Penalty Calculator is a helpful resource Canadian Mortgage Trends has supplied to Canadian mortgage holders amid these important considerations. The calculator can provide you with an estimation of what your penalty fee will look like as you determine your best financial route. Continue reading