The upcoming changes to underwriting in the mortgage industry will make it very difficult to refinance if you own rental properties.
Currently we are able to use 80% of the rent as a direct offset against mortgage payments. After April 19, we will only be able to 50% of the rent and it will be added you your Gross Income….of which the lenders will use up to 44% of that income (O.A.C.). What does this mean??
Example of a refinance:
Client was looking to refinance to lower their payments. They have provable income and would lower their monthly payments by $550 as a result of the refinance.
The lender requires that the TDS (the total of their Mortgage, property tax, & credit debt for all properties) be less than 42% of their Gross Monthly Income.
With the 80% rental offset, their TDS was 39.6% – within guidelines and the mortgage was approved.
After April 19, the lender will use a 50% “add to gross” qualifying method – this put their TDS at 64.1% – this deal would not be approved!!!
To find out if you can take advantage of low rates and easier qualifying critieria, call MBN Mortgage at 403-685-7025 to book an appointment.
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Brad Gavin –
Mortgage Agent – MBN Mortgage Ltd (Associated with Mortgage Intelligence) 111 5809 Macleod Tr SW Calgary, AB T2H0J9 (866) 955-9662 toll free (403) 685-7025 wk (403) 968-5337 cell (866) 269-3499 fax bgavin@mbnltd.com www.mbnmortgage.com
