B20 Guidelines

OSFI, the regulator of all Canadian financial institutions, has imposed changes that have tightened the lending reins on all regulated lenders and CMHC to encourage prudent residential mortgage underwriting standards.  Called the B20 Guidelines, there are actually 17 pages of rules and regulations to follow now.

So if you've applied for a loan lately, that's why there's been an increased amount of information requested.  If you're thinking of taking on a mortgage, be sure to work with a mortgage professional right from the start, either through your bank or a broker, to ensure you know exactly what kind of funds are available to you and what you need to provide in order to receive those funds.

Some items to remember mentioned to me from mortgage professionals I work with are:

Mortgage Approval Takes More Time Now

Pre-approval doesn't mean much until you've written an offer on a specific property.  Lenders may ask for an appraisal of the property, site survey, minutes and details about stratas, building inspection results and more before you receive final approval.  This takes time, so give yourself at least 10 working days for financing subject removal on your offer.

High-ratio Financing (where the client's downpayment is less than 20%) with both Canadian Mortgage Housing Corporation (CMHC) and Genworth is limited to properties valued at less than $1,000,000.

Home Equity Lines of Credit

Loan to Value (LTV) is now 65% down from a maximum of 80%.

Qualifying Rates

Clients seeking variable rates and fixed terms less than 5 years will need to qualify on "the greater of the contractual mortgage rate or the Five-Year Benchmark Rate published by the Bank of Canada" (currently 5.24%).

Downpayment

Clients need to be able to prove that these funds have been in their ownership for at least 90 days.  

Cash  back should not be considered part of the down payment, which could mean the end of 100% financing in the marketplace.

Proof of Income for Salaried Employees

You'll need to provide 2 or 3 of your most recent paystubs and a Notice of Assessment for the most recent tax year.

Proof of Income for Salary + Commission Employees 

You'll need to provide proof of 3 years' income to show average commission earned.  Clients can provide 3 years' Notice of Assessment, or 3 years' T1 General or 3 years T4.  In any case, Notice of Assessment for the most recent tax year is required.

Proof of Income for Self-Employed Individuals

You'll need to provide 3 years' T1 General and Notice of Assessment for the most recent tax year.  If clients own an incorporated company, company financial statements sometimes help, especially for clients who retain most of the profits in the company.

The above are just a few of the basics.  Everyone's situation is different and this is by no means a comprehensive list.  Work closely with your mortgage broker and/or bank to ensure your transaction is as smooth and stress-free as possible.  

This time of year as the holiday decorations get put away, lots of us vow to get a grip on all the extra stuff that seems to have accumulated over the year.  I remember reading an article written back in the mid 2000s by Peter Walsh that outlined a method to help do that.

It was called Think F.A.S.T.   Peter Walsh said that before you do anything else, you have to stop buying stuff.  Seeing as most of us are trying to save money after seeing the holiday blitz on our credit and debit cards, that should be easy.  But it's not.  What about all the great sales??  Nope - no big bargains, no retail therapy, no super sales.  Just stop buying stuff for awhile.  

Then get started:

F:     Fix a time.  Schedule a time where you won't be interrupted and stick to it.  Do not answer the phone, check your emails or stop to talk to someone who comes selling things at the door.  Not too long a time but long enough to see results.

A:     Anything not used in 12 months.   If you haven't used something in the last year, it's unlikely you will.  Ask yourself the following questions as you encounter each piece of clutter (put them up on a post-it note).

• Do I use this?
• How long has it been since I've used it?  (If you can't remember that's a clue!)
• Will I use it again?
• Is it worth the space it takes up in my house? (Is it worth dusting?!)

Clients had an accident while on a quick trip to the States to buy milk.  It turned out to be a very expensive jug of milk!  I thought I'd share this informative write-up provided by Jarett Schill of Schill Insurance as a bit of a primer on what to do about travel insurance -- even those quick little runs across the border to go shopping, out skiing , see a baseball game or just a weekend getaway at a B&B.  I'm no expert on insurance so please make sure you do your own homework on this.  The important thing is just to make sure you have it so there's no crying over spilt milk!

The Importance of Travel Insurance

  There seems to always be a reason for travel.  It could be a dream vacation, a trip to see family, or simply just going across the border for groceries.  Whatever the reason, it is always important to carry travel insurance, so that coverage is available in the event of the unforeseen.  The benefits of provincial medical systems are lost when travelling outside of your home province.  One quick incident can lead to thousands of dollars in expenses, and leave an individual left to bear those costs for a lifetime.

  The importance of this coverage cannot be understated.  The International Federation of Health Plans 2011 statistical report cited the average cost of a day in a US hospital to be $3,949.  The average hospital cost of a patient in the US was $15,734.

Coverage Provided

  Listed below is some of the coverage that travel insurance provides.  However, please note that other coverage is available and this is not a complete list of coverage.

Medical Expense Coverage

  Coverage provided through travel insurance plans include coverage for sickness or injury requiring     emergency medical treatment while travelling outside of your home province.  

Insurance companies provide a limit of $5 Million coverage for expenses that are incurred.

  Coverage includes but is not limited to:

• Coverage for a licensed ambulance
• Emergency dental expenses
• Emergency medical care
• Expenses to cover the cost of bringing a family member to your bedside
• Lodging for you, or your travelling companion while confined to a hospital