|BC Home Partnership Loan Program
|Dec 16, 2016
|The BC government announced an initiative to assist first time buyers with their down
payment. The BC program contributes to the amount the first-time buyers have already
saved for their down-payment, matching up to $37,500 or up to 5% of the purchase price
with a 25-year loan that is interest-free and payment-free for the first 5 years. After the 5
years, the home-buyers will repay the loan amortizing over 20 years. These loans will be secu
secured as a 2nd mortgage. Maximum purchase price is $750,000. The total down paym
payment including the BC Home Partnership Loan must be less than 20%.
The mortgage insurance premiums are as follows:
LTV: 90.01 - 95% = 3.85%
LTV: 85.01 - 90% = 3.60%
LTV: 80.01 - 85% = 1.80%
All lenders have advised they will offer clients their best insured rates.
|The BC Minister of Finance has announced several changes to the Property Transfer
Tax program, effective Wednesday, which include:
• a property transfer tax exemption for Canadian citizens and permanent residents
who purchase newly-built homes, condos and townhouses under $750,000. Purchasers
must live in the property for at least one year. This is a potential savings in closing costs o
of up to $13,000;
• a one percent increase in property transfer tax to three percent for homes which are
are sold over the $2 million mark;
• the first time home buyers exemption will remain in place for homes under
• buyers will need to start disclosing their country of residence in all property
• the beneficial ownership of properties held by corporations will also be tracked.
|What can effect your credit score?
|Okay, you have worked hard to build up your credit score. You pay all your debts on
time, have focused on getting out of debt --maybe even closed a few of those accounts
because you do not need them or want them anymore. Then one day you apply for a lo
loan and there are issues. What???
Everyone understands the need to pay down debt and pay bills on time but there are a
few wonky things that affect your credit score. Remember those cards you cancelled?
Well as counterintuitive as that sounds closing accounts can hurt your score. The reason
for the ding is that closing an account drops your global credit limit, which increases the
percentage of debt in relationship to the limit. For example, you have two credit cards
with a limit of $1000 each, for a total of $2000. You owe $500 on one card and $800 on
the other. That debt load is 65% of the global limit. So you decide to pay off the $500 and
close the account. That reduces the global limit to $1000 with an $800 balance. Now the
percentage of debt is up to 80% and your credit score takes a hit. The ideal percentage
between global limit and debt owed is 30% to 35% - the lower, the better.
Here is another stunner: Having a credit card or line of credit and not using it. Yep,
having too much unused credit can have a negative impact -- a creditor can not tell how
you manage credit payments if you do not use it.
Here is something I know you have done in the past. You are in your favourite store and y
you are offered an amazing discount if you open a credit account. As tempting as that is, j
just say no. Store cards carry much higher interest rates than major credit cards and your
credit score may take a hit. An inquiry can drop your credit score between five points and
35 points, depending on your credit profile.
Shopping around for the best rates on anything - a car, or a mortgage or any other big
purchase affects your score. Each time you apply for credit, it creates a hard inquiry,
which lowers your score. If there are a lot of "inquiries" within a short period of time, it
does not look good. Shopping around for rates is not a bad thing to do especially at
mortgage renewal time, but let me do it for you - your credit report gets pulled only once
as we review multiple options for you.
So how do you get a keep a really high score? Here are a few tips:
• Length of credit history - 30 year plus.
• Two major credit cards with no more than 15% balance
• Two store or gasoline cards with no more than 15% balance
• A car loan or another secured loan
• No late pays
• No bankruptcy
• No judgments
If you like more information about your credit score, call me today.
|Mortgage outlook 2013
|Feb 12, 2013
|For the last 20 years since I became a licensed mortgage broker, there have been a good
number of changes in housing financing guidelines. Let me share them with you.
New Immigrant Program was introduced around mid 1990 with the influx of immigrants from
Asia. At that time the BC economy was not doing well and housing market was in the
doldrums. Purchase prices then were mostly lower than city assessed value. Banks
recognized the quality of these new immigrants and started to embrace this new market
The housing market began to pick up after 2011. In the mid 2000’s, government introduced a
number of aggressive guidelines which helped further boost the Canadian housing market e.g.
95% financing for self-employed borrowers, 100% financing for income proof borrowers, 95%
financing for investment property, 40 year amortization etc.
In late 2008 and for a short few months, housing market almost came to a halt due to Global
Economic Crisis. However, to everybody surprise, the market started to pick up in early 2009.
Major contributing factors were : (a) much reduced property prices in B.C. where prices were
down by over 20% (b) Canadian dollar dropped almost another 20% vis-a-vis RMY as
compared with the previous year. Foreigners especially those from China seized this as an
opportunity to invest in Canada.
Starting 2010, the Government made a number of credit changes following the Global Economic
Crisis to instil more responsible lending practices and reduce the risk of a similar housing
meltdown that was experienced in other countries, including the US. Those changes include
reducing maximum amortizations from 40 years to 25 years for insured mortgages, increasing
down payment requirements on rentals from 5% a short few years ago to 15%, reducing the
amount (LTV) consumers could refinance etc. These government measures do have an impact
on housing market here in B.C. and instrumental in slowing down the acitivity.
The most recent guideline from the government is called B-20. It further tightens up on
maximum loan amount, qualification of borrowers, down payment requirements etc. Unlike
previous changes, this
B-20 encompasses both insured & conventional financing instead of just high ratio insured
financing. Changes to Business-For-Self and Equity lending are most drastic and impact
customers who could not provide sufficient income proof.
Highlight of the B-20 :
1. Amortization reduced from 30 years to 25 years
2. Refinancing lowered from 85% to 80%
3. Eliminating insured lending on property purchase over $1 million
4. Capping GDS at 39 %
5. These new rules will take effect on July 9, 2012
Since late 2012, we have seen a slow down in housing activity. Looking ahead in the year it is
unlikely for the government to relax its financing guidelines as EU financial crisis is yet to be
resolved, U.S. is still struggling with a huge deficit and China economy is not as robust as
before. Global unemployment rate reached 197million and is forecasted to add another 5 mllion
by this year, totalling over 200million people employed.
We are hopeful that by early 2014 government may loosen its grip on lending guidelines . This is
based on following assumptions:
a) In last quarter of 2013 Banks will report their earnings which might be adversely
affected by the tightened lending guidelines.
b) the slow down in housing activity since late 2012 may have satisfied the
government’s target to cool off the Canadian housing market.
Loan applications that could have been approved under previous guidelines are now being
declined by class A lenders. Luckily for consumers, we still have class B & C lenders as
alternative lending options. The other good news is interest rate will remain unchanged until
|Federal Governments Mortgage Insurance Changes
|Feb 4th, 2011
|2010 had been an active year for real estate market in Greater Vancouver. Home
owners in a number of areas such as Vancouver west side and Richmond witnessed
substantial appreciation in their property values.
The government is concerned about the rising household debt. For the second time
in twelve months, the Department of Finance tightened rules on residential
mortgages to help slow the pace of household debt accumulation.
Below are just a few quick summary points of some of the highlights.
*Maximum amortization reduced to 30 years from 35 years
(which had already been shortened from 40 to 35 years in 2008),
*Maximum LTV for refinances reduced to 85% from 90%
*No more ability for lenders to receive insurance (and therefore securitize) Lines of
Credit (April 18, 2011)
What was not touched...
changing the down payment requirement - still sits at 5%
changing the ways that condo fees would be included in calculating TDS
Changes to the amortization period and the refinancing ratio will take effect March 18
and the HELOC change will take effect April 18, 2011.