Qualifying Interest Rate
Effective April 19, 2010, loans with a fixed rate term of less than 5 years and for all variable rate mortgages, regardless of the term, the qualifying interest rate will be the greater of the benchmark rate or the contract interest rate.
CMHC defines the benchmark rate as the Chartered Bank – Conventional Mortgage 5 year rate that is the most recent interest rate published by the Bank of Canada. The rate is currently 5.39% This rate is set each Monday and can be found at
http://www.bankofcanada.ca/en/rates/interest-look.html
For loans with a fixed term of 5 years or more, the qualifying interest rate will be used for qualification purposes.
This has the effect of a level playing field on all High Ratio deals. It is more important than ever to get a complete detailed pre-approval. There are differences in Underwriting between lenders and this become even more important with these tighter rules.
qualifying rate Advice – Avis 146
Stated Income Files for self employed
There has been a subtle yet drastic change to this product.
Stated Income files – max ltv on purchase reduced from 95% to 90% & on refinances reduced from 90% to 85%
The big change however, is that clients with business older than 3 years to not qualify and must prove income normally. The problem with this change is that they have not accounted for loans personally guaranteed by the business owner such as cars, equipment etc. That was the true reason the Self Employed product came in being in the first place. We are moving back to a time of true underwriting for self employed clients and private money will become a necessary evil.
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