Azfar Tahir, MBA, President/Principal Broker
420 Britannia Road E Mississauga, ON, Canada

What is the stress test? A mortgage stress test is a way of determining exactly how much you can afford (and under what circumstances). If your income was reduced or you lost your job, could you still afford to make mortgage payments? What if interest rates spike or you need to refinance your home? Borrowers are basically required to prove their ability to make mortgage payments.This certainly affects homebuyer hopes, as their finances are even more closely scrutinised before... gaining mortgage approval. Many applicants have already felt the wrath of the stringent rules of the mortgage stress test. Yet another change is looming, the stress test is all set to get harder for uninsured mortgages effective June 01.The change which would see the threshold increase to 5.25% or two percentage points above the market rate, whichever is higher would cause few ructions in the mortgage industry. There are rumors that mortgage professionals should be attuned to another prospect in coming weeks of a similar hike in the stress test level for insured mortgages. With the stress test getting harder, the role of a mortgage advisor becomes even more important.Your mortgage advisor can advise on how you can improve your situation to qualify under the stress test or offer alternative lending solutions.

Higher mortgage rates coming sooner than expected as Canadian economy recovers While the country is mired in a destructive third wave of COVID-19 infections, Canada’s economic outlook is growing brighter by the day. This, of course, is great news as we progress toward a full post-pandemic recovery, but homebuyers should take heed that mortgage rate hikes are on the horizon and may be arriving faster than previously expected as the economy rebounds.... In one of its regularly scheduled announcements, the Bank of Canada said today that it would leave its mortgage market-influencing overnight rate at the current ultra-low level of 0.25 percent for the time being. Not too long ago, the central bank appeared committed to keeping the rate at the current level until 2023 to support the economic recovery. This stance was maintained even as buyers scooped up record numbers of properties and prices soared in Canada’s housing market, with low mortgage rates being a major driver of this activity. In today’s announcement, the bank changed its tune, revising its growth forecast upward and stating that it now anticipates the economic conditions to begin raising rates will be met in the second half of 2022. This doesn’t guarantee that rates will remain in place until then, but it’s a noteworthy shift in tone for the bank. If good news continues across all parts of the economy, it is possible the Bank will move up their timeline even further. Therefore, Canadians should brace for higher mortgage rates sooner than expected, wrote mortgage rate comparison site Ratehub.ca in an email today following the bank’s announcement. The announcement is bad news for anyone who currently has a variable rate mortgage as they should now be prepared for prime to move sooner than expected. The positive outlook also means that fixed rates should continue to drift up throughout the remainder of 2021, Ratehub.ca continued. Economists analyzing the bank’s announcement today were quick to point out that despite the upbeat outlook, uncertainty around the pandemic persists. The Bank of Canada will be watching vaccine and virus developments closely, wrote TD Senior Economist Sri Thanabalasingam. The speed of the economic recovery is dependent on vaccines winning the race against COVID-19 and its variants. This is the key downside risk in the Bank’s projection and bad news on this front could see the Bank delay its plans for when monetary policy will normalize, he added.

Fixed-rate mortgages have gone up, but it doesn’t matter. Fixed-rate mortgage rates are rising, but don’t be fooled into believing that this halcyon low interest rate environment is ending, because it isn’t. Firstly, it doesn’t affect anybody with an existing fixed-rate mortgage; it’s only for new mortgagesand not variable-rate mortgagesbut it’s only gone up a quarter point, which equals $12 for every $100,000 of mortgage money, Dustan Woodhouse, president of Mortgage Arc...Continue reading

What is a good credit score in Canada for a mortgage? Looking to buy a house in Canada? Before applying for a mortgage pre-approval, you should check your credit score in order to ensure you can be approved for a mortgage in the first place. The bottom line is, the lower your credit score is, the more consequences you're likely to experience. This is why, even if it may take longer than expected, you may want to hold off on buying a house until your low credit score is resolv...ed and we'll get into why below. Credit score ranges Having bad credit can not only make it difficult to obtain a mortgage loan, but it can also raise the amount of interest you pay on a loan. Poor credit can deem you a "high-risk lender" by financial institutions if you seem more likely to default on mortgage payments. In Canada, this is what your credit score can mean (as it will vary per lender): Poor (300-574) You may not actually get approved for a mortgage by a traditional lender with a poor credit score, however, every lender will have a different set of requirements. If a lender does approve you, your interest rate will be much higher and if you default on too many mortgage payments, you could lose your home. And it's not just getting a mortgage that will be an issue. You'll also find it difficult to get approved for lines of credit or other personal loans. Below Average (575-659) Even though your credit score isn't "poor", you may still have to pay higher interest fees with a below-average credit score. Fair or Average (660-689) Your payment history may be a little rocky but not quite as bad as those with a lower credit score, but lenders may still deem you riskier than others, so you can still expect higher interest rates. Good (690-740) With a good credit score and a good reputation with your credit bureau, you won't have trouble getting a mortgage or other types of loans like a line of credit, personal loan, or car loan. If you pay off your debts like your credit cards on time every time, it won't take long to build a good credit score. Plus, with a higher credit score, you'll have lower interest rates. Excellent (741-900) With an excellent credit history and score, lenders won't have any hesitation when it comes to approving you for a mortgage loan. A perfect credit score is rare, but definitely not impossible. The higher the credit bureaus rank your score, the lower the interest rate you'll have to pay, so it's worth trying to improve your score before applying.

Mortgage rates will stay near record-lows for 2021: CREA Record-low mortgage rates are one of the major drivers of the huge rebound in home sales Canada has experienced since early summer. And, with the country’s central bank committing to keeping its mortgage market-influencing interest rate low into at least 2023, there’s little chance that prospective homebuyers will see mortgage rates meaningfully rise next year.... That’s according to the latest Canadian Real Estate Association (CREA) resale housing forecast, that also predicted the national average home price will rise over nine percent in 2021 while purchasers will yet again break records for homebuying activity. CREA’s forecast noted that with mortgage rates currently offered by lenders declining to record low levels, the Bank of Canada’s benchmark five-year rate has also been pushed down. Since this rate is used by major banks to qualify applicants under the federal mortgage stress test, more buyers have been able to qualify for mortgages. In other words, not only have low mortgage rates pushed more qualified buyers to purchase homes this year, they’ve also increased the total number of buyers that can qualify for mortgages with big banks. But even with the low mortgage rates on offer in 2021, CREA believes the current blistering pace of sales won’t last through the year. That said, it will still be a robust and even record-setting year for sales. Despite the tumultuous spring months, homebuyers are on track to set a record for activity in 2020, with 544,413 homes projected to change hands by December 31st. On a monthly basis, sales are forecast to ease back to more typical levels throughout 2021, CREA wrote in the report. [H]owever, presuming there’s a more normal spring market in 2021, the year as a whole is expected to see more home sales than 2020. CREA is predicting 584,000 home sales for 2021, another record-setter for activity in a single year. What’s more is that figure could be even higher, but limited housing supply in Ontario is expected to temper the already potentially record-breaking sales performance. Ontario has seen strong demand for several years, particularly outside of Toronto, which has eroded active supply in the province, CREA said in its report. The strength of demand, particularly for larger single-family properties, will drive the average price higher as potential buyers compete for the most desirable properties.

Why you should refinance your mortgage now- Historically low interest rates have been the impetus for a home buying frenzy that’s swept much of Canada, but it’s also presented a unique, if a once in a lifetime, opportunity for real estate investors. In Toronto, the COVID-19 pandemic has softened demand in the condo rental market and left investors in straits. However, the Bank of Canada cut interest rates to historic lows in an effort to resuscitate the economy, giving invest...ors an opportunity to refinance their mortgages and, in some cases, make lower monthly payments. Now you can unlock up to 80% of the appraised value, "And, in some cases, the payments could be lower than their existing payments. The best time to refinance a mortgage is when it’s due for renewal, but with mortgage rates as low as they are, refinancing before term could be worth the outstanding penalty because of how much more equity can be unlocked, which could be redirected into tax-deducible portfolio growth. There are going to be buying opportunities as the market changes, so you can take advantage of it and take out money for tax deductible investments, If you take out an extra $100,000 from a refinance, because your property value is higher than when you bought it, you’re paying $210 per month tax deductible on interest. "Whether it's your primary residence or a cash flow positive income property, and you don't need the income, you can use it to buy more investment properties and reduce your income for tax purposes." If an investor has $1,000 positive cash flow from an income property, they’re in the 50% marginal tax bracket, meaning if they make $12,000 a year from rental income, that’s only $6,000 a year after taxes. However, if an income property pays $1,000 per month towards debt, you’re giving up $500 a month after tax, or $6,000 a year, that you would have in your pocket, but now you could buy something for $200,000 that could make you more than the $6,000 in income that you lost, The unlocked equity can also be used to consolidate other debts, Fundamentally, when money goes from 3% to 2%, the cost of $1 million goes down to $20,000 from $30,000, and you get an extra $500,000 for free. You want to make the money tax deductible. Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.

Why you should refinance your mortgage now Historically low interest rates have been the impetus for a home buying frenzy that’s swept much of Canada, but it’s also presented a unique, if a once in a lifetime, opportunity for real estate investors. In Toronto, the COVID-19 pandemic has softened demand in the condo rental market and left investors in straits. However, the Bank of Canada cut interest rates to historic lows in an effort to resuscitate the economy, giving investo...rs an opportunity to refinance their mortgages and, in some cases, make lower monthly payments. Now you can unlock up to 80% of the appraised value, "And, in some cases, the payments could be lower than their existing payments. The best time to refinance a mortgage is when it’s due for renewal, but with mortgage rates as low as they are, refinancing before term could be worth the outstanding penalty because of how much more equity can be unlocked, which could be redirected into tax-deducible portfolio growth. There are going to be buying opportunities as the market changes, so you can take advantage of it and take out money for tax deductible investments, If you take out an extra $100,000 from a refinance, because your property value is higher than when you bought it, you’re paying $210 per month tax deductible on interest. "Whether it's your primary residence or a cash flow positive income property, and you don't need the income, you can use it to buy more investment properties and reduce your income for tax purposes." If an investor has $1,000 positive cash flow from an income property, they’re in the 50% marginal tax bracket, meaning if they make $12,000 a year from rental income, that’s only $6,000 a year after taxes. However, if an income property pays $1,000 per month towards debt, you’re giving up $500 a month after tax, or $6,000 a year, that you would have in your pocket, but now you could buy something for $200,000 that could make you more than the $6,000 in income that you lost, The unlocked equity can also be used to consolidate other debts, Fundamentally, when money goes from 3% to 2%, the cost of $1 million goes down to $20,000 from $30,000, and you get an extra $500,000 for free. You want to make the money tax deductible. Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.

Why you should refinance your mortgage now- Historically low interest rates have been the impetus for a home buying frenzy that’s swept much of Canada, but it’s also presented a unique, if a once in a lifetime, opportunity for real estate investors. In Toronto, the COVID-19 pandemic has softened demand in the condo rental market and left investors in straits. However, the Bank of Canada cut interest rates to historic lows in an effort to resuscitate the economy, giving invest...ors an opportunity to refinance their mortgages and, in some cases, make lower monthly payments. Now you can unlock up to 80% of the appraised value, "And, in some cases, the payments could be lower than their existing payments. The best time to refinance a mortgage is when it’s due for renewal, but with mortgage rates as low as they are, refinancing before term could be worth the outstanding penalty because of how much more equity can be unlocked, which could be redirected into tax-deducible portfolio growth. There are going to be buying opportunities as the market changes, so you can take advantage of it and take out money for tax deductible investments, If you take out an extra $100,000 from a refinance, because your property value is higher than when you bought it, you’re paying $210 per month tax deductible on interest. "Whether it's your primary residence or a cash flow positive income property, and you don't need the income, you can use it to buy more investment properties and reduce your income for tax purposes." If an investor has $1,000 positive cash flow from an income property, they’re in the 50% marginal tax bracket, meaning if they make $12,000 a year from rental income, that’s only $6,000 a year after taxes. However, if an income property pays $1,000 per month towards debt, you’re giving up $500 a month after tax, or $6,000 a year, that you would have in your pocket, but now you could buy something for $200,000 that could make you more than the $6,000 in income that you lost, The unlocked equity can also be used to consolidate other debts, Fundamentally, when money goes from 3% to 2%, the cost of $1 million goes down to $20,000 from $30,000, and you get an extra $500,000 for free. You want to make the money tax deductible. Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.

Why you should refinance your mortgage now Historically low interest rates have been the impetus for a home buying frenzy that’s swept much of Canada, but it’s also presented a unique, if a once in a lifetime, opportunity for real estate investors. In Toronto, the COVID-19 pandemic has softened demand in the condo rental market and left investors in straits. However, the Bank of Canada cut interest rates to historic lows in an effort to resuscitate the economy, giving investo...rs an opportunity to refinance their mortgages and, in some cases, make lower monthly payments. Now you can unlock up to 80% of the appraised value, "And, in some cases, the payments could be lower than their existing payments. The best time to refinance a mortgage is when it’s due for renewal, but with mortgage rates as low as they are, refinancing before term could be worth the outstanding penalty because of how much more equity can be unlocked, which could be redirected into tax-deducible portfolio growth. There are going to be buying opportunities as the market changes, so you can take advantage of it and take out money for tax deductible investments, If you take out an extra $100,000 from a refinance, because your property value is higher than when you bought it, you’re paying $210 per month tax deductible on interest. "Whether it's your primary residence or a cash flow positive income property, and you don't need the income, you can use it to buy more investment properties and reduce your income for tax purposes." If an investor has $1,000 positive cash flow from an income property, they’re in the 50% marginal tax bracket, meaning if they make $12,000 a year from rental income, that’s only $6,000 a year after taxes. However, if an income property pays $1,000 per month towards debt, you’re giving up $500 a month after tax, or $6,000 a year, that you would have in your pocket, but now you could buy something for $200,000 that could make you more than the $6,000 in income that you lost, The unlocked equity can also be used to consolidate other debts, Fundamentally, when money goes from 3% to 2%, the cost of $1 million goes down to $20,000 from $30,000, and you get an extra $500,000 for free. You want to make the money tax deductible. Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage.