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by Helen Morris,
National Post
Edmonton Mortgage Rates
Securing a great mortgage deal can take a bit of work and planning, but if you are a salaried employee then you will be taking a well-trodden path. Experts and friends and family alike will all be there to offer advice and tell you about their experiences.
However, if you are self-employed, the process can be more complex.
The most straightforward way to qualify for a mortgage as a self-employed individual is for the lender to look at the income on your Canada Revenue Agency notice of assessment for the past two years and see if you qualify for a loan in much the same way as an employee would.
“The first thing I make sure is that the tax filings and financial statements are in order so we can see the track record of their earnings,” says Rob Regan-Pollock, senior consultant at Invis mortgage brokerage in Vancouver. “If the last two years of earnings are sufficient to qualify for the mortgage that they’re looking to take out, then they are a regular-income-qualified file and can put as little as 5% down.”
Insurers such as the Canada Mortgage and Housing Corp. (CMHC) will allow self-employed individuals to increase the income on their notice of assessment by 15% for the purposes of mortgage qualification. This is a generally accepted increase to compensate for non-cash items such as business use of the home. Their website gives a full rundown of the requirements for self-employed borrowers. read the following PDF for more information:
http://cmhc-schl.gc.ca/en/hoficlincl/moloin/hopr/upload/CMHC-Self-Employed.pdf.
“Consistency in income is your best bet [in order to secure a mortgage],” says Carol Bezaire, vice-president, tax and estate planning, at Mackenzie Financial in Toronto. “If you are thinking about going for a mortgage, make sure that over the last two or three years you are consistent in how much income you are bringing in.”
In order to determine your income, CMHC will average your income from the past two years, but if your income has been rising each year for the past four years or more, they will use the most recent year for their calculations.
However, in order to take advantage of certain tax strategies, many self-employed individuals may keep money in their business rather than generating income. If you are unable to qualify based on your verifiable income you can still obtain insured mortgage finance, but CMHC will charge you a higher premium. Since April this year, CMHC only permits you to state your own income if you have been in business for less than three years.
Ranjit Dhaliwal, a mortgage broker with Mortgage Intelligence in Brampton encourages clients to register their business, as the licence or article of incorporation can show if they have been in operation for less than three years.
Mr. Dhaliwal says to get the best rates when stating your own income, many lenders will be looking for mortgage loan insurance unless you can put down a deposit of more than 35%.
The insurers also recommend that lenders demand higher minimum credit scores from borrowers stating their own incomes.
“It’s absolutely essential that they have a good credit score,” says Mr. Dhaliwal. “Self-employed individuals tend to have higher balances on their credit cards, lines of credit and so on because they are using that for their business. If they’re planning on purchasing a house or refinancing a house, maybe bring these balances down a few months before going to see a mortgage broker.”
The early years of self-employment can be a time of financial uncertainty while you establish your business and build up a reputation with customers.
Financial advisors say look before you leap into anymore debt at this time.
“Once you’ve checked your finances and you’ve looked at your credit score and everything else, it may not be the time to buy,” says Ms. Bezaire. “Maybe it’s the time to rent for a little bit, until you get firmer ground under your feet.”
Read more:
http://www.nationalpost.com/
Housing Resales Up 3% in September
Canadian existing home sales rose in September for a second straight month while average prices reversed the falling trend with a 1.9% increase from August, the Canadian Real Estate Association said in its latest report.
Seasonally adjusted unit sales rose to 33,913 homes from 32,933 units in August, the group said. Sales in September were 20 percent below year-ago levels and the average price for a home was little changed at C$331,089 ($329,180), the group added.
“Supply and demand are rebalancing, and that’s keeping prices steady in many markets,” said Georges Pahud, president of CREA.
The interest-rate environment continues to help the housing market. While the prime lending rate has jumped after the Bank of Canada raised its overnight lending rate three times since June to 1 percent from a record 0.25 percent, long-term rates continue to fall. Canada’s mortgage rates are now close to the lowest since the Korean War The central bank said in July it expects housing to contribute 0.6 percentage point to Canada’s 3.5 percent growth this year.
Most analysts now expect the Bank to hold off on any further rate hikes this year while it gauges the effects of recent tightening on the domestic economy, and watches the very uncertain situation south of the border. However, the overall tone of the Bank’s statement was more hawkish than expected, and this has led some economists to suggest this may not be the last hike of the year. Much will depend on economic data out over the next month and a half in advance of the Bank’s next decision on October 19th.
“Mortgage lending rates eased in the third quarter, which helped support sales activity over the past couple of months,” said Gregory Klump, chief economist with CREA. “Interest rates are going nowhere fast, so home ownership will remain within reach for many homebuyers.”
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CAAMP Stats – October issue
Below are the statistical tables from the October 2010 Issue of CAAMP Stats.
To find out more about the Canadian Association of Accredited Mortgage Professionals (CAAMP), please visit their website at www.caamp.org
Bank of Canada Interest Rate
| July 20, 2010 | 0.75 % |
| September 8, 2010 | 1.00 % |
| October 19, 2010 | Next meeting date |
Source: Bank of Canada
Bank Prime Lending Rate
| July 21, 2010 | 2.75 % |
| September 9, 2010 | 3.00 % |
| October 20, 2010 | Next meeting date |
Source: Bank of Canada
Conventional Mortgage – 5 Year Rate*
| August 23, 2010 | 5.49 % |
| August 30, 2010 | 5.39 % |
| September 15, 2010 | 5.39 % |
Source: Bank of Canada
*Determinant for high ratio mortgage variable qualifying rate
US Federal Reserve Board Discount Rate
| August 10, 2010 | 0.00 % – 0.25 % |
| September 21, 2010 | 0.00 % – 0.25 % |
| November 3, 2010 | Next Meeting date |
Exchange Rate $CDN($US)
| September 1, 2010 | 0.9506 |
| September 17, 2010 | 0.9696 |
| October 4, 2010 | 0.9785 |
Source: Bank of Canada
Government of Canada Bonds
| Bond Type | August 25, 2010 | September 15, 2010 | September 29, 2010 |
| 1 year Treasury Bill | 0.98% | 1.30% | 1.27% |
| 3 year Benchmark Bond Yield |
1.53% | 1.72% | 1.58% |
| 5 year Benchmark Bond Yield |
2.08% | 2.25% | 2.01% |
| 10 year Benchmark Bond Yield |
2.83% | 2.90% | 2.74% |
Source: Bank of Canada
Total New Housing Starts (Seasonally adjusted and annualized)
| Province | June 2010 |
June 2009 |
July 2010 |
July 2009 |
August 2010 |
August 2009 |
| Newfoundland/Labrador | 4,500 | 2,900 | 3,300 | 2,900 | 1,800 | 2,400 |
| PEI | 1,000 | 1,000 | 800 | 600 | 800 | 1,000 |
| Nova Scotia | 3,200 | 2,700 | 5,800 | 3,300 | 2,200 | 4,200 |
| New Brunswick | 4,700 | 3,300 | 6,100 | 3,800 | 4,000 | 3,700 |
| Quebec | 54,500 | 37,900 | 52,900 | 46,200 | 38,200 | 47,300 |
| Ontario | 56,100 | 45,800 | 53,200 | 39,100 | 59,400 | 44,200 |
| Manitoba | 8,100 | 5,000 | 9,700 | 4,000 | 4,000 | 5,000 |
| Saskatchewan | 6,200 | 5,100 | 5,300 | 3,600 | 6,100 | 5,100 |
| Alberta | 27,000 | 20,000 | 29,200 | 17,600 | 20,900 | 18,400 |
| British Columbia | 27,000 | 14,100 | 22,800 | 13,100 | 25,400 | 19,200 |
| CANADA | 192,300 | 137,800 | 189,100 | 134,200 | 162,800 | 150,500 |
Source: CMHC Housing Now – September 2010 and September 2009. This seasonally adjusted data goes through stages of revision at different times of the the year.
Average MLS® Resale Price for Local Markets
| City | August 2009 | August 2010 |
| Halifax | $231,203 | $254,298 |
| Saint John | $166,117 | $173,918 |
| Quebec | $220,760 | $239,688 |
| Montreal | $279,897 | $303,707 |
| Ottawa | $315,176 | $322,281 |
| Toronto | $387,899 | $410,995 |
| Hamilton/Burlington | $291,374 | $299,812 |
| Winnipeg | $207,389 | $222,597 |
| Saskatoon | $281,871 | $305,866 |
| Calgary | $388,725 | $385,712 |
| Edmonton | $318,321 | $326,550 |
| Vancouver | $608,032 | $680,782 |
| Victoria | $481,279 | $471,929 |
Source: Canadian Real Estate Association
Housing Affordability Index
Standard two-storey
| Average Price | Qualifying Income ($) | RBC Housing Affordability Measure | |||||
| Region | Q2 2010 ($) | Y/Y % ch. | Q2 2010 | Q2 2010 (%) | Q/Q Ppt. ch. | Y/Y Ppt. ch. | Avg. since ’85 (%) |
| Canada* | 374,200 | 10.1 | 86,600 | 48.9 | 2.1 | 4.3 | 43.3 |
| British Columbia | 625,400 | 12.0 | 130,100 | 71.2 | 2.5 | 8.3 | 54.0 |
| Alberta | 373,900 | 4.9 | 85,100 | 37.5 | 0.7 | 1.5 | 38.6 |
| Saskatchewan | 319,900 | 8.4 | 77,500 | 43.0 | 0.6 | 2.2 | 38.0 |
| Manitoba | 276,000 | 10.7 | 68,500 | 39.3 | 2.2 | 3.1 | 37.7 |
| Ontario | 393,000 | 9.8 | 93,500 | 47.4 | 2.6 | 4.0 | 43.7 |
| Quebec | 263,100 | 12.3 | 64,000 | 43.7 | 1.6 | 4.5 | 38.8 |
| Atlantic | 224,000 | 6.5 | 58,000 | 37.8 | 1.5 | 2.1 | 38.1 |
| Toronto | 564,600 | 10.7 | 126,600 | 60.0 | 3.1 | 5.9 | 53.4 |
| Montreal | 331,400 | 9.5 | 77,900 | 53.3 | 1.9 | 4.9 | 41.6 |
| Vancouver | 768,700 | 14.3 | 156,700 | 82.6 | 2.9 | 11.2 | 62.4 |
| Ottawa | 358,600 | 12.7 | 90,600 | 43.0 | 3.5 | 4.3 | 39.0 |
| Calgary | 422,100 | 5.5 | 91,600 | 40.2 | -0.1 | 1.8 | 40.3 |
| Edmonton | 373,600 | 8.1 | 86,400 | 39.0 | 1.2 | 2.3 | 37.0 |
Detached bungalow
| Average Price | Qualifying Income ($) | RBC Housing Affordability Measure | |||||
| Region | Q2 2010 ($) | Y/Y % ch. | Q2 2010 | Q2 2010 (%) | Q/Q Ppt. ch. | Y/Y Ppt. ch. | Avg. since ’85 (%) |
| Canada* | 330,000 | 10.8 | 76,000 | 42.9 | 1.9 | 4.0 | 39.0 |
| British Columbia | 561,600 | 15.4 | 116,700 | 63.8 | 1.7 | 8.8 | 48.8 |
| Alberta | 347,900 | 5.2 | 77,900 | 34.3 | 1.4 | 1.4 | 36.1 |
| Saskatchewan | 313,100 | 6.4 | 73,600 | 40.8 | 1.5 | 1.6 | 36.6 |
| Manitoba | 249,500 | 10.0 | 62,800 | 36.0 | 0.8 | 2.7 | 36.8 |
| Ontario | 342,200 | 10.3 | 81,200 | 41.2 | 2.3 | 3.6 | 40.1 |
| Quebec | 221,100 | 11.6 | 53,500 | 36.5 | 1.3 | 3.7 | 32.9 |
| Atlantic | 196,000 | 4.5 | 49,700 | 32.4 | 1.1 | 1.4 | 31.6 |
| Toronto | 472,800 | 10.9 | 105,900 | 50.2 | 2.4 | 5.0 | 48.2 |
| Montreal | 267,200 | 11.0 | 63,200 | 43.2 | 1.8 | 4.3 | 36.8 |
| Vancouver | 688,600 | 18.0 | 140,500 | 74.0 | 1.7 | 11.7 | 57.2 |
| Ottawa | 354,100 | 11.7 | 86,800 | 41.2 | 3.6 | 4.0 | 36.6 |
| Calgary | 420,000 | 4.6 | 89,200 | 39.2 | 0.9 | 1.6 | 39.9 |
| Edmonton | 335,700 | 9.6 | 77,000 | 34.7 | 2.5 | 2.4 | 33.9 |
Source: RBC Quarterly Housing Affordability Study
Competition Bureau and Realtors reach landmark agreement
The Competition Bureau announced yesterday that it had reached an agreement in principle with the Canadian Real Estate Association (CREA), which will allow for home sellers to pay for only those services they want from their real estate agents. Previously, under the rules established by CREA, consumers had to opt for an entire set of services, a practice the Competition Bureau deemed anti-competitive.
The agreement could change radically the terms under which Canadians buy and sell homes. “If ratified, the agreement will ensure that consumers have the ability to choose which services they want from a real estate agent when selling their home, and to pay for only those services,” said Melanie Aitken, Commissioner of Competition. It also provides much-needed flexibility for real estate agents by ensuring that they have the ability to offer the variety of services and prices that meet the needs of consumers.”
“Since challenging CREA‘s rules, the Bureau’s goal has always been to achieve a long-term solution that would strengthen competition in the residential real estate brokerage services market,” added the Commissioner, “This resolution, if ratified by CREA‘s membership, achieves this goal.”
The deal caps off more than four years of feuding between the industry and the federal watchdog.
In February, the Competition Bureau formally challenged CREA’s practices, claiming they “limit consumer choice” and prevent real estate agents from offering lower cost services to customers. At the heart of the complaint was the Multiple Listing Service, which is owned by CREA and is responsible for about 90% of home sales in the country.
The real estate group fired back, accusing the commissioner of tarnishing the reputation of the profession with unfounded condemnations of its practices.
But many industry observers said the public relations war was unwinnable for CREA and that its days of rejecting “a la carte” services were numbered. Meanwhile, CREA maintained that, despite the agreement, its rules did not “prevent or restrict a broad range of business models.” The association said that “in CREA’s view, the consent agreement reflects this reality and would avoid unnecessary and expensive litigation proceedings.”
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