It has been only a few days since the federal government announced the coming of the end for 40 year amortization mortgages and 100% or zero-down mortgage financing, and many lenders have began the cutting back their products.
Institutional lenders including ING, BMO and CIBC (including their mortgage broker channel, FirstLine) are first out of the gate with the cut-backs, much . These lenders announced the end of 40-year amortizations effective immediately in preparation for the October 15th deadline when Canadian Government insured mortgages will not see amortizations longer than 35 years.
Not all lenders are created equal- lenders like Merix Financial indicated today in a news release to brokers that they will continue to offer 100% financing and 40-year amortizations for the time being.
What does this mean to consumers trying to squeeze the most they can into their mortgage? It means that if you would like, or need a 40 year amortized mortgage or would like to keep your down payment money in the bank and apply for 100% mortgage financing, you should act quickly!
Have we noticed a change in the way lenders look at mortgage applications? Absolutely. As mortgage underwriting guidelines continue to tighten, the true value of a trusted advisor soars exponentially. We had a client in our office just today who makes great income, has an excellent professional job, but was experiencing much frustration in obtaining mortgage financing on her own. We sat down with her, looked at her entire portfolio of cash, assets and her plan for the property she was about to purchase and in an hour and a half, had restructured some debt, extended her amortization and used her short time in her profession as an asset, rather than as a liability. At the end of our time together, she was pre-qualified for her new home, and would walk away with over $340.00 more cash flow in her pocket.
Is the mortgage marker getting tougher? Absolutely. Are there still some excellent products that fit most borrowers? 40-year amortizations aren’t the be all and end all in the financing game. Like anyone good at their craft, the loss of a simple tool does not change the art of putting Canadians in homes.
