When it comes to mortgage rates, it pays to shop around

Finding the best rate

Mortgage rules have changed and evolved over the years.

I was chatting with one of my broker friends to clarify one of the newer guidelines and she sighed and said how hard it it is to stay on top of the policies when they shift so often.

With the introduction of the “stress test” in 2016, we were qualifying clients for either the Bank of Canada benchmark rate (which changed multiple times) or the clients’ interest rate plus two per cent. Most of my clients whose mortgages were coming up for renewal had to qualify at 4.94% or even 5.25%. Interestingly, that was in the ballpark range of where interest rates with many lenders now sit.

I discussed his upcoming renewal with one of my favourite clients. His current lender offered him a renewal rate he was not happy with. Because I had consent from the client, I called the lender to double check if they could do any better than their initial offer. They could not. Because of their internal policy, and the terms of the client’s mortgage, it truly was the best they could offer him.

Because of a fairly recent change to qualification guidelines, other lenders are able to offer far more attractive rates because of the amount of equity he has in his home and the initial purchase price of his home five years ago.

His particular lender is one of my favourites and is usually highly competitive at renewal time. I was very surprised about the loophole in their policy.

Making a long story short, we will be switching to a different lender and saving my client 0.8% on his mortgage rate, which in his case equates to a savings of $21,315.00 over the next five years.

While rate isn’t always the deciding factor, it really pays to do your homework at renewal time.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


Dealing with last-minute mortgage glitches

Read mortgage fine print

Read your mortgage paperwork.

I am sharing this situation as a reminder of the importance of reading the fine print. I have been working on a refinance at renewal for a couple in northern B.C. They tried to sell their home but their acreage is unique and they did not have any offers. Their home sat on the market for more than a year and their mortgage was coming up for renewal.

In the meantime, life happened. They were at their limits on multiple credit cards and credit lines and were stretched pretty thin. Work slowed for a bit so his income was down and they had a new baby and she was on maternity leave.

They did have a significant amount of equity in their home, so the plan was made to consolidate their debt to improve cash flow for the short-term. We got an approval with a great rate. So far, so good.

The approval stipulated most of their credit cards and lines of credit would be closed. I submitted the application specifying which ones were to be left open and which were to be closed. When the mortgage commitment came from the lender, I double-checked the list and all was in order.

The lender pulled the clients’ credit reports about two weeks before closing and came back with a few changes because they were now over limit on two more cards. The clients went to the lawyer and learned the new lender wanted an additional credit card closed. That particular card was one they used for rewards points, so they were not willing to close that specific card.

They discovered this change when they were signing with the lawyer two days prior to their scheduled closing date. I became aware of this the morning their mortgage should have finalized. Their lawyer told them it wasn’t an issue and she would sort it out, but the lender was unwilling to compromise.

The clients called me and were very frustrated. After several calls back and forth with the lender and the client, we were able to reconfigure their file a bit so that card stayed open and another credit line was closed.

So where does reading your mortgage paperwork come in?

Most people think once they sign their original documents from their mortgage person their financing is set in stone. In fact, there is always fine print that includes something to say any material change to the clients’ financial situation may cause the financing to be altered or cancelled.

A wise broker I know shared a list of 10 mortgage “commandments” with me in my early days. It laid out 10 things you should never do between the time your mortgage is approved and the time it finalizes. It includes things like not change jobs, buy a new vehicle, co-sign for any loans, spend your down payment, go over limit on your credit cards, etc.

At the time, I remember thinking to myself the list was so condescending I would never share it with clients.

After many years and interesting scenarios as a broker, I go over this list with almost every client. If you think no one would do those things, I can assure you I’ve seen it happen.

In this situation, we were able to sort things out and their mortgage funded the next day.

If you run into something similar at the last minute, loop your mortgage person in. They will likely have no idea things are happening behind the scenes and they are in the best position to help you navigate through it. Our goal is to help you have a smooth experience, so we are here all the way through the process.

Part of my practice is to connect with my clients’ legal representatives so they have my contact information in case anything like this pops up at the last minute.

Clients often don’t know they can reach out for help, and the lawyers may not think to ask.

Should something like this happen to you at closing time, take a deep breath and reach out to your mortgage person.

It may be very simple to solve when the right people are helping.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Don't procrastinate when it comes to your finances

Danger of procrastination

Recently, I was up with the birds (literally) but really wanted to sleep a bit longer.

I decided to listen to a podcast rather than get up. The podcast, ironically, was about procrastination.

The general message was procrastinating often makes us feel bad. There are things we want to accomplish or feel we should do, but we choose the immediate gratification/dopamine hit of time in front of the TV or mindless scrolling (or more time in bed) rather than the satisfaction that comes with achieving our larger goals and dreams.

The podcaster talked about procrastinating with both our actions and making decisions.The irony that I was listening to the podcast rather than getting up and tackling my day was not lost on me. There were a few comments the podcaster made that struck home.

Making a decision, any decision, is better than no decision. Human nature (for many of us) is, when facing a tough decision, we freeze. We over-analyze the “what-ifs” and potential outcomes. We worry about what others may think of our choices. We may not even know what our options are.

While procrastinating, opportunities are lost or we dig ourselves in a bit deeper.

The last year in particular has been challenging with higher interest rates and a steadily increasing cost of living. Many families are struggling to cover their bills and put food on the table.

I’ve written columns before about how, if you have equity in your home, it might be wise to consider a consolidation of your consumer debt to free up cash flow. Making lifestyle changes can be easier said than done.

I believe that staying the course and getting your mortgage paid off as soon as possible is always the best plan, but there comes a time when you also need to look at how your finances are affecting your physical and mental health.

When we get behind with our bills or are teetering on the edge of not being able to cover everything this month, we are also concerned about what people might think. We are worried about a call from our creditors asking for a payment. We project a certain lifestyle and feel the pressure to maintain this even though we can’t actually afford it right now. We lose sleep at night thinking about the “what-ifs”.

If you are in this situation and have equity in your home, I encourage you to take action to explore your options sooner rather than later.

I have worked with clients who have never missed a payment ever but their credit scores were in the 500 range (not good) because they are over-extended and maxed out on multiple loans, credit cards and/or credit lines.

Had they reached out sooner, we would have had more options to help them with a fresh start. This doesn’t mean we can’t find options, but there are certainly more available when credit scores are higher.

As a rule I don’t get into the discussion of why you would work with a mortgage broker versus a bank but this is one of those times. I do place many of my clients with chartered banks when that is the right fit.

When you approach your bank your situation might not be a fit for their lending guidelines. They may tell you they are not able to help you and that you will have to sell your home or look at a consumer proposal or bankruptcy.

Selling your home may be the right answer, but before you jump to that place take a look at other options. Pick up the phone. Don’t procrastinate.

If you are working with a mortgage broker, they are able to explore multiple lenders and programs to help you try to find a solution to put you on the right track sooner rather than later.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


Importance of getting all the paperwork in order when seeking a mortgage

Mortgage puzzles

I’ve written about mortgage documentation in several columns over the years.

Last week, I had an interesting call with several of my colleagues about trends we are seeing in the mortgage world around paperwork right now.

There are people who think mortgage brokers are able to cut corners and have an easier time getting a mortgage approved. Ironically, I believe we are held to a higher standard which sometimes translates to frustration for clients as we are doing our due diligence with document collection.

When starting with new clients, part of my conversation includes an overview of the documents we will need as well as an explanation of why. This conversation also includes a bit of an apology because I know how challenging this process can sometimes be.

“My bank has never asked for that” is something I hear often. What clients don’t consider is that their bank has a full historical view of their day-to-day banking as opposed to new lenders who are just being introduced to these clients.

If you were asked to lend someone $500,000, would you do it on a handshake? Would you assume they will repay you in a timely manner (as agreed) because they seem like good people? The answer is likely no to both questions.

That’s one part of the puzzle. The other part is the increasing trend of fraud in the mortgage world.

From my perspective, my reputation and livelihood are too important to entertain clients who I suspect are not quite as they appear. I explain I am very particular about gathering documents upfront to make sure we are not going to run into any unexpected or unpleasant surprises.

From time to time we come across documents that are glaringly obvious attempts at fraud. With today’s technology, fictitious documents are becoming easier to create and harder to detect. As brokers we represent both our clients and the lenders we are placing their mortgage with. I discovered fraudulent documents on one of my files recently and cancelled the application and notified the lender.

My now former client was very very angry. He didn’t see what the big deal was. He went to a local branch and his mortgage was approved.

Where is the harm? If part of the fraud includes income documents, will this client actually be able to make his mortgage payments down the road? Because he did have a substantial down payment relative to his income, does he have a sideline that isn’t declared or legal?

I absolutely agree that collecting the required documents for your mortgage can seem frustrating, and you may question why your mortgage person is asking for the weird and wonderful collection of paperwork they are asking for. Or you may question why they are asking for more and more paperwork.

Please understand, these requests are coming from the lender and we are doing our best as the middleman to help ease the process for you.

Lenders want to be confident that they are making solid decisions with their approvals and are doing their best to prevent mortgage fraud.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

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About the Author

Tracy Head helps busy families get a head start on home ownership.

With today’s increasingly complicated mortgage rules, Tracy spends time getting to know her clients and helps them to better understand the mortgage process. She supports her clients before, during, and after their mortgage is in place.

Tracy works closely with her clients, offering advice and options. With access to more than 40 different lenders. She is able to assist with residential, commercial, and reverse mortgages in order to match the needs of her clients with the right mortgage package.

Tracy works hard to find the right fit for her clients and provide support for years down the road.

Call Tracy at 250-826-5857 or reach out by email [email protected]

Visit her website at www.headstartmortgages.com

Download her app: Headstart Mortgage Architects



The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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