When the mortgage rules changed for insured mortgages (those with less than 20% down) in October of 2016, the most constant question I had was, “How do I qualify for more?”. Borrowing power for those paying CMHC fees (Insured mortgages) was significantly reduced due to the new standard of qualifying at the benchmark rate (currently 4.99% rather than the 5 year fixed rate they were getting, for example 2.89%).
The standard answer to “How can I qualify for more mortgage?” from the typical banker would be to:
a. make more money
b. reduce your debt load
Let’s face it, sometimes that’s not possible.
One of the biggest benefits of using a Regina Mortgage Broker is that we think outside the box and have more options than your typical, one trick pony, bank. We work with many lenders to get you the mortgage you want, at the best interest rates. By having all these lenders to work with, we find the one that will allow us to qualify you for the most money and maximize your borrowing power. Let’s not get crazy and say everyone should have a huge mortgage, but there are some circumstances where bonus or overtime income can’t be used, or a spouse’s income can’t be used because of poor credit etc. so income is there, the mortgage is affordable, but just doesn’t work on paper.
I can use more income than just your paycheck. Do you have children? Do you get child tax benefits? Do you receive child support or alimony? How about rental income? Are you looking at a home with a legal basement suite in it? Does your part time job guarantee you any hours? Do you have any type of home-based business on the side (Monat, R+F, etc)? How long have you been selling your home-based business product? That additional income makes a BIG difference!
I’m not saying to go spend your child tax benefit on the mortgage payment, but if you have the money to make it work (using the example of income that can’t be used on the application), and the child tax income is what we need to use on paper to get you approved for the mortgage you want and can afford, then it’s an option! I want you to have every option available to you and explained so you can make the best educated decision possible for you and your family. If you don’t know the option is there, how can you possibly chose it?
Legal basements suites or an up/down duplex is an excellent option to offset your mortgage payment AND qualify for a higher mortgage without making more income or reducing your debts. I can use 100% of that rental income to qualify you for the mortgage. For example, if a person had an income of $75,000 per year with little or no debt, their max purchase price of a home is $310,000. If they look for a home that has a legal basement suite, they now qualify for a purchase of $375,000. In Regina, $65,000 makes quite a difference in the real estate world.
Mortgage brokers also offer:
-higher debt servicing than other lenders (example). In simple terms, we have a higher percentage of income allowed for mortgage and other debt than other lenders 35/40. We can qualify you for a bigger mortgage.
-Offset that bigger mortgage with lower interest rates! Often our rates beat the bank by a quarter percent – that is big money on your average mortgage! EXAMPLE of .25% difference. Best of both worlds, higher mortgage amount, but same payment because our interest rates are lower.
The bottom line is, use a Mortgage Broker. We can do more for you!