Why does the Mortgage Broker want so many docs? We actually don’t want to ask for so many. Why does the Mortgage Lender want so many docs? They actually don’t, and would rather go through much less.
So who wants all these docs, and who is it that does not trust what you are saying? That would be the government, more specifically OSFI, the Office of the Superintendent of Financial Institutions, and they have a very specific mandate which is not to make getting a mortgage easy. Their mandate is to protect the Canadian banking system and make sure those lenders have prudent systems in place to follow. In essence it's the federal government implementing what they can, through policy and procedures for banks to follow in order to avoid a financial melt down; such as what happened in the United States of America in 2008.
The thing is, back in 2008 Canada's banking system actually came out just fine, and we had much looser rules then, compared to what we have today with the "Stress Test." However that hasn't stopped OSFI from every year making it a little bit tighter on mortgage regulations. So every year since 2008 we have seen a bit more tightening and a bit more documentation needed to cover for the tightening of rules.
My personal opinion is that the government is actually putting real stress on everyone from first time buyers, to people that want to move out and up to bigger homes or people that want to refinance. The tightening of rules year after year is just slowing down the Canadian economy at large and pushing Canadians to high interest private mortgages. My hope is that someone in the government will have their finger on the undo button for some of these mortgage rules, to once again make it easier on Canadians and stimulate the economy.
How to get a kitchen with your new mortgage
Canadians know that a smart home renovation can both increase their property value, and improve the way they live in their home. Putting a renovation on your high-interest credit card can wipe out the value you’re adding, and create months – or years - of financial stress. Good news, there is a better way. You may be able to get that new kitchen (or bathroom, backyard etc.) through your mortgage, typically your most cost-effective way to finance. Here’s how I can help:
PURCHASE Plus Improvements: Perfect for those looking at buying a fixer-upper, a Purchase Plus Improvements Mortgage covers the sale price of the home, plus the cost of any renovations that will increase the value of the property, up to $40,000. Then you can look at financing up to 95% of this future post-reno value. If you’ve found a house with “great bones” that can be renovated into the home of your dreams, then this is the mortgage that can make those dreams come true.
REFINANCE Plus Improvements: Tailor-made for those that don’t have enough equity to refinance, the Refinance Plus Improvements Mortgage allows you to finance up to 80% of the improved value of your home once the up to $40,000 in home improvement renovations are completed. Your lender will advance the total mortgage, pay off your existing mortgage, and instruct the solicitor to hold back the amount for the improvements. Once the lender is satisfied the renos are complete, the solicitor is instructed to release the funds for the renos. There are options we can discuss for carrying your expenditures until the funds are released. Should you have more than 20% equity in your current home, you may be able to simply do a conventional refinance and take out the equity you need.
It’s almost always better to protect your savings, keep large expenses off your credit card, and simply access funds through your mortgage. I can even help structure a mortgage with features to help you pay your project off faster – for more savings. There are several steps required to complete these types of mortgages and I would be happy to review the process with you. Let’s make your dream a reality!