Canada is experiencing a meaningful rise in mortgage delinquencies, the highest in more than a decade. After years of low interest rates and rapid home price growth, many households are now facing financial pressure from higher borrowing costs, inflation, and stagnant wage growth.

But rising delinquencies don’t affect everyone the same way. Whether you’re thinking about buying, planning to sell, or currently behind on payments, the impact looks very different depending on your situation.

Let’s break it down clearly.

Why Mortgage Delinquencies Are Rising

Several economic pressures are converging at once:

1. Higher Interest Rates

Renewals at today’s rates can mean payment increases of $800–$2,000+ per month, depending on mortgage size and type.

2. Inflation & Cost of Living

Everything from groceries to insurance has increased sharply, leaving less room in household budgets.

3. Slower Wage Growth

Income hasn’t kept pace with rising expenses, reducing financial resilience.

4. High Household Debt

Canadians carry some of the highest debt levels in the world. When rates rise, the impact is amplified.

🏡 If You’re a Potential Buyer

Rising delinquencies can create both opportunity and caution.

Opportunities

• More inventory as financially stressed owners list their homes

• Less competition compared to the peak pandemic years

• More negotiating power on price, conditions, and closing timelines

Risks

• Lenders may tighten qualification standards

• Appraisals may come in lower in softening markets

• Stress test requirements remain high

What Buyers Should Do

• Get a fully underwritten pre‑approval, not a quick online estimate

• Know your comfort payment, not just your maximum qualification

• Consider a rate hold to protect against future increases

🏠 If You’re a Seller

A rise in delinquencies can shift buyer psychology and market dynamics.

Challenges

• More listings from distressed sellers can increase supply

• Buyers may expect price reductions or concessions

• Homes needing updates may sit longer

Opportunities

• If you have strong equity, you’re still in a favourable position

• Downsizing or relocating can improve cash flow

• Well‑priced homes in good condition continue to sell

What Sellers Should Do

• Get an updated, realistic market evaluation

• Make small improvements that boost value

• If selling due to financial strain, explore refinance or restructuring options first

🚨 If You’re Behind on Payments or At Risk

This is where rising delinquencies matter most; because lenders become less flexible as defaults increase.

But here’s the key: You have more options than you think, and the earlier you act, the more solutions exist.

What Rising Delinquencies Mean for You

• Lenders may escalate files more quickly

• Renewal options may be limited

• You may be pushed toward higher‑rate alternative lenders

• Power of sale timelines may tighten

What You Should Do Immediately

• Speak with a mortgage professional early

• Explore refinance or switch options

• Consider short‑term interest‑only solutions

• Consolidate high‑interest debt to reduce monthly payments

• Respond to lender communication, silence accelerates enforcement

⚖️ Power of Sale vs. Foreclosure: What’s the Difference?

Many homeowners don’t realize that Ontario commonly uses Power of Sale, not foreclosure, and the distinction matters.

What Is a Power of Sale?

Power of Sale is a legal process where the lender sells the property to recover the money owed. It is:

• Faster than foreclosure

• Less expensive

• Still leaves the homeowner responsible for any shortfall

Key Features

• The lender does not take ownership of the property

• They simply sell it on the open market

• Any remaining equity after debts and fees goes back to the homeowner

• If the sale doesn’t cover the mortgage + legal fees, the homeowner still owes the difference

This process can move quickly, sometimes within 60–90 days of missed payments.

What Is a Foreclosure?

Foreclosure is when the lender takes ownership of the property. It is:

• Slower

• More expensive

• Rare in Ontario

Key Features

• The lender becomes the legal owner

• The homeowner loses all equity

• The lender keeps any profit from the eventual sale

Foreclosure is more common in provinces like BC and Alberta, but not Ontario.

Power of Sale vs. Foreclosure — Quick Comparison

Separation or divorce is one of the most emotionally and financially challenging transitions a person can face, and when a home or mortgage is involved, the stakes become even higher. Decisions made during this period can affect your credit, your borrowing power, and your long‑term financial stability.

Whether you plan to keep the home, sell it, or buy out your former partner, understanding the process, and avoiding common mistakes is essential.

Below are the key dos and don’ts, along with why a formal separation agreement is not just helpful but required before any future mortgage financing can move forward.

Why the Home Becomes the Centre of the Conversation

For most couples, the home is the largest shared asset, and often the largest shared debt. Lenders need clarity on:

• Who is responsible for the mortgage

• Who will retain ownership

• What support payments (if any) will be made

• How debts and assets are being divided

Without this clarity, lenders cannot assess affordability or risk. That’s why the separation agreement becomes the foundation for any future mortgage planning.

The Dos: What You Should Do During a Separation

Even if the situation feels unfair, missed payments will damage both parties’ credit. And damaged credit can delay, or completely prevent, refinancing, buying out a partner, or qualifying for a new mortgage.

✔ Communicate early with your mortgage professional

The earlier you understand your options, the more control you have. A mortgage professional can help you map out:

• Whether one party can qualify to keep the home

• What income will be needed

• How support payments will affect ratios

• Whether refinancing is possible; now or later

✔ Gather financial documents

During separation, paperwork becomes your best friend. You’ll need:

• Income documents

• Mortgage statements

• Property tax bills

• Debts and liabilities

• Proof of support payments (once formalized)

✔ Prioritize the separation agreement

This is the single most important document in the entire process. It outlines:

• Who keeps the home

• Who pays the mortgage

• How equity will be divided

• What support payments will be made

• Timelines for refinancing or selling

Lenders rely on this agreement to determine whether future financing is possible.

The Don’ts: What You Should Not Do

✘ Don’t stop paying the mortgage or joint bills

Even if you’ve moved out. Even if you feel you’re paying more than your share. A single missed payment can:

• Lower both your credit scores

• Increase your future mortgage rate

• Reduce your borrowing power

• Jeopardize your ability to keep or buy a home

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✘ Don’t rely on verbal agreements

Verbal agreements may feel cooperative in the moment, but lenders cannot use them. Only a signed separation agreement is recognized.

✘ Don’t assume you can refinance immediately

Refinancing during separation requires:

• A finalized separation agreement

• Proof of support payments (if applicable)

• Updated debt obligations

• Sufficient income to qualify

Without these, lenders cannot proceed.

✘ Don’t transfer ownership without legal advice

Removing someone from title or mortgage obligations is not automatic. Both require lender approval, and often refinancing.

Why a Separation Agreement Is Essential for Mortgage Financing

A lender must know:

• Who is responsible for the mortgage

• What support payments are being made or received

• How debts are divided

• Whether one party is buying out the other

• What the future financial obligations look like

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Without this, lenders cannot calculate accurate GDS/TDS ratios, assess risk, or approve financing.

Support payments matter, in both directions

• Support received can be used as income (with proper documentation).

• Support paid counts as a liability and reduces borrowing power.

Lenders require a signed agreement and proof of consistent payments before using these amounts in qualification.

Planning Your Next Steps

If you’re navigating a separation and a home is involved, the best approach is:

1. Keep payments current

2. Finalize the separation agreement

3. Document support payments

4. Review your mortgage options early

5. Create a plan for refinancing, selling, or buying out your partner

With the right guidance, you can protect your credit, preserve your options, and move forward with clarity.

Co‑signing a mortgage can feel like a generous way to help a family member or friend become a homeowner, especially in markets like Oshawa, Ontario, where rising prices and strict qualification rules make it harder to qualify on your own.

But co‑signing comes with serious long‑term risks, and many Canadians don’t fully understand them until it’s too late.

Recently, I spoke with a homeowner in Oshawa who used a co‑signer to qualify for their mortgage a few years ago. Their mortgage is now up for renewal, and the co‑signer wants off the mortgage so they can purchase their own home without the co-signed mortgage working against their qualifying. Unfortunately, the property cannot be refinanced, and the primary borrowers still struggle to meet the qualifying ratios on their own.

This is a situation I see more often than people realize.

Below, we’ll break down why this happens, the risks co‑signers face, and what borrowers should consider before asking someone to co‑sign.

What Does It Mean to Co‑Sign a Mortgage?

When you co‑sign a mortgage in Canada, you become equally responsible for the debt. You are not a “backup” borrower, you are a full borrower in the eyes of the lender.

A co‑signer is typically added when:

• The main borrower doesn’t meet income requirements

• Debt‑to‑income ratios are too high

• Credit history is limited or weak

• The lender wants additional security

This is common in cities like Oshawa, where home prices have grown faster than incomes.

The Real Risks of Co‑Signing a Mortgage

1. You Are 100% Liable for the Mortgage

If the primary borrower misses payments, the lender will pursue you with the same urgency. Late payments, arrears, or defaults all appear on the co‑signer’s credit report.

This can impact:

• Your credit score

• Your ability to borrow for your own home

• Your ability to qualify for car loans, lines of credit, or refinancing

Many co‑signers don’t realize they are taking on full financial responsibility, not partial.

2. You Can’t Simply “Remove” a Co‑Signer Later

This is the biggest misconception.

A co‑signer can only be removed if:

• The mortgage is refinanced and

• The primary borrower qualifies on their own under current stress‑test rules

In the Oshawa case I mentioned, the borrowers:

• Could not refinance due to market conditions

• Did not meet today’s stricter qualifying ratios

• Could not remove the co‑signer at renewal

This left the co‑signer stuck on the mortgage indefinitely.

3. Renewals Do NOT Automatically Remove Co‑Signers

Many people assume that at renewal, the lender will “re‑evaluate” and remove the co‑signer.

That is not how renewals work.

At renewal:

• The lender typically does not re‑underwrite the file

• The existing borrowers (including co‑signers) remain on the mortgage

• Removal requires a full requalification, which is essentially a refinance

If the borrower’s income, debt, or credit has changed, or if interest rates are higher, qualifying alone may be impossible.

4. Co‑Signing Reduces the Co‑Signer’s Borrowing Power

Because the mortgage appears on the co‑signer’s credit report, it affects their:

• Total debt service ratios

• Ability to buy their own home

• Ability to refinance their own mortgage

• Access to credit products

Even if the co‑signer never makes a payment, the debt counts against them.

5. If the Property Value Drops, Refinancing Becomes Harder

In markets like Oshawa, where values are fluctuating more, refinancing may not be possible if:

• The loan‑to‑value ratio is too high

• The borrower has insufficient equity

• The lender’s appraisal comes in low

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This traps both the borrower and the co‑signer in the existing mortgage.

6. Relationship Strain Is Common

Money and family don’t always mix well.

Co‑signing can lead to:

• Stress

• Resentment

• Pressure

• Misunderstandings

• Long‑term financial entanglement

• 
  

When a co‑signer wants out — and can’t get out — relationships often suffer.

Why This Happens More Often Today

Several factors make co‑signing riskier now than in the past:

✔ The mortgage stress test is stricter

Borrowers must qualify at the higher of:

• The benchmark rate, or

• Contract rate + 2%

✔ Interest rates are higher

Higher rates = harder qualification.

✔ Debt levels have increased

Car loans, credit cards, and student loans reduce borrowing power.

✔ Income hasn’t kept pace with home prices

Especially in Durham Region and throughout the GTA

✔ Refinancing rules are tighter

Lenders require stronger ratios and more documentation.

All of this makes it harder for borrowers to “take over” the mortgage later.

What Borrowers Should Consider Before Asking for a Co‑Signer

1. Can you realistically qualify on your own in the future?

If income won’t increase or debt won’t decrease, co‑signing may create long‑term issues.

2. What happens if the co‑signer wants out?

Have a plan — and a timeline.

3. Can the property be refinanced later?

Market conditions matter.

4. Are you prepared for higher rates at renewal?

Payment shock can affect qualifying ratios.

5. Is there a better alternative?

Sometimes:

• A larger down payment

• Paying off debt

• Adding rental income

• Choosing a different property …can eliminate the need for a co‑signer.

What Co‑Signers Should Consider Before Saying Yes

1. Are you willing to be financially responsible for the full mortgage?

Because you are.

2. Can you still qualify for your own borrowing needs?

This is often overlooked.

3. Are you prepared to stay on the mortgage for the full term?

Even 5 years can be a long time.

4. Do you trust the borrower’s financial habits?

Late payments affect you too.

5. Are you comfortable with the risk of being unable to exit later?

This is the most common problem.

A Real‑World Example: The Oshawa Co‑Signer Who Can’t Get Off the Mortgage

Here’s the situation I encountered:

• A homeowner in Oshawa, Ontario used a co‑signer to qualify

• The mortgage is now up for renewal

• The co‑signer wants to be removed

• The property cannot be refinanced since the appraisal came in low

• The primary borrowers do not qualify under today’s ratios

• The current lender cannot remove the co‑signer without qualifying the main borrowers

This is exactly how co‑signers become financially trapped.

It’s avoidable — but only with proper planning.

How to Avoid These Problems

Here are strategies borrowers and co‑signers can use:

1. Review qualifying ratios annually

Don’t wait until renewal.

2. Reduce debt aggressively

This improves TDS/GDS ratios.

3. Increase income where possible

Second jobs, bonuses, rental income, etc.

4. Build equity faster

Prepayments help.

5. Plan refinancing timelines early

Don’t assume it will be easy.

6. Work with a mortgage professional

A broker can model scenarios and timelines.

Final Thoughts: Co‑Signing Is a Serious Financial Commitment

Co‑signing can be a powerful way to help someone become a homeowner — but it comes with real risks that can last for years.

If you’re considering co‑signing, or if you’re already in a co‑signed mortgage and want to explore your options, it’s important to get clear, personalized advice.

As we move deeper into 2026, one thing is clear: interest rate expectations have never been more divided. While the Bank of Canada has maintained a steady hand through the first half of the year, the outlook for the remainder of 2026 is anything but settled. Borrowers, homeowners, and buyers are all asking the same question; where are rates headed next?

The honest answer: it depends on which economic force wins the tug‑of‑war currently playing out beneath the surface.

Below is a clear breakdown of the competing pressures shaping rate expectations for the rest of the year, and what Canadians should be watching.

Why Some Expect Rate Cuts Later in 2026

A growing number of analysts believe the Bank of Canada may need to ease rates before the year ends. Their reasoning is rooted in several weakening indicators:

Job creation has cooled, and certain sectors are showing signs of fatigue. When hiring slows, consumer spending typically follows; a signal that the economy may be losing momentum.

2. Rising Insolvency Filings

Both consumer and business insolvencies have been trending upward. This is often one of the clearest signs that higher borrowing costs are straining households and companies.

3. Softening Economic Output

GDP growth has been modest, and many Canadians are feeling the weight of elevated mortgage and credit payments. A softer economy generally increases the likelihood of rate relief.

Together, these indicators suggest that the Bank may eventually need to provide support, especially if economic conditions deteriorate further in the second half of the year.

Why Others Believe Rates Could Still Rise

On the other side of the debate, some economists argue that the Bank of Canada may be forced to raise rates if inflation refuses to cool.

1. Oil Prices Are a Key Wildcard

Rising oil prices remain one of the biggest inflation risks. Energy costs feed directly into transportation, manufacturing, and consumer goods. If oil continues to climb, inflation could re‑accelerate, and the Bank has been clear that inflation control remains its top priority.

2. Sticky Service‑Sector Inflation

Even as goods inflation cools, service‑sector inflation (restaurants, travel, insurance, personal services) has remained stubborn. This is the type of inflation that central banks watch closely.

3. Global Pressures

Geopolitical tensions, supply chain disruptions, and commodity volatility can all push inflation higher, limiting the Bank’s ability to cut.

If inflation proves persistent, the Bank may have little choice but to hold rates higher for longer; or even tighten further.

Trade Negotiations Could Add More Uncertainty

The upcoming CUSMA negotiations add another layer of unpredictability. Early expectations suggest the discussions may be tense, and any instability in trade relations could:

• Slow economic activity

• Increase business uncertainty

• Push prices higher depending on tariff outcomes

• Amplify the negative indicators already emerging

This means trade outcomes could influence whether the Bank leans toward easing or tightening later in the year.

So What Does This Mean for Borrowers in 2026?

With so many competing forces, the best strategy is preparation and flexibility.

Variable‑Rate Borrowers

Expect continued short‑term stability, but be prepared for movement in either direction. The second half of 2026 could bring meaningful changes depending on how inflation and economic data evolve.

Fixed‑Rate Shoppers

Fixed rates will continue to react to bond yields, which are highly sensitive to economic data and global events. Opportunities may appear in windows, staying informed is key.

Renewing Homeowners

If your renewal is coming up in 2026 or early 2027, start planning early. Even small shifts in rates can significantly impact monthly payments.

Buyers

Uncertainty doesn’t eliminate opportunity. As the market adjusts, buyers may find more negotiating power or improved affordability depending on how rates move.

Final Thoughts

The rest of 2026 is shaping up to be a year defined by competing economic narratives. Inflation risks remain, but so do signs of economic strain. Until one side clearly outweighs the other, rate expectations will remain split, and the Bank of Canada will continue to navigate a narrow path.

Through all of this, informed planning is your best advantage. Whether you’re buying, renewing, or simply trying to understand how rate movements affect your long‑term strategy, I’m here to help you make confident, well‑timed decisions.

If your mortgage renewal is approaching in 2025, you might be feeling uneasy about rising interest rates and their impact on your monthly payments. Many homeowners secured mortgages at historically low rates during the pandemic—now, as renewals take place in a different financial climate, borrowers must prepare for higher costs. But don’t worry, strategic planning can help you navigate these changes with confidence.

Why Are Mortgage Payments Increasing?

Interest rates were at record lows throughout the pandemic, making homeownership more affordable for many Canadians. Now, with rates significantly higher than before, renewing homeowners are seeing an increase in their monthly payments. The Bank of Canada estimates that 60% of mortgages will renew in 2025 and 2026, meaning a large number of borrowers will need to rethink their financial strategy.

How Higher Rates Affect Homeowners

A jump in mortgage payments can strain your budget, but there are proactive steps you can take to mitigate financial stress and secure manageable payment terms.

What You Can Do to Prepare

✅ Assess Your Financial Position: Review your income, expenses, and any discretionary spending to identify cost-cutting opportunities. 

 ✅ Explore Refinancing Options: Extending your amortization period or refinancing to a more flexible mortgage can ease your monthly payment burden. 

 ✅ Lock In Your Rate Early: If your renewal is nearing, consider locking in a favorable rate before further increases occur. 

 ✅ Consult a Mortgage Expert: Speaking with a professional can help you uncover personalized solutions, from debt consolidation to mortgage restructuring.

Frequently Asked Questions

💡 How much will my monthly payments increase? The exact amount depends on your original mortgage rate, your new rate upon renewal, and your remaining balance. If you secured a mortgage at 2-3%, expect potential renewal rates between 4-6%, leading to a significant monthly payment increase.

💡 Should I switch from a variable-rate to a fixed-rate mortgage? This decision depends on your comfort level with risk. Fixed rates provide stability in uncertain economic times, while variable rates historically offer savings over the long term. Consulting a mortgage expert can help you weigh the pros and cons.

💡 Is refinancing worth considering? Refinancing may lower your payments or consolidate debt, but extending your mortgage term means paying more interest over time. Weigh the short-term benefits against the long-term costs with professional guidance.

Let’s Plan Your Renewal Together

Mortgage renewals don’t have to feel overwhelming. By reviewing your financial situation early, exploring refinancing possibilities, and seeking expert advice, you can ensure a smooth renewal process.

Ready to discuss your mortgage options? Reach out to us today to create a strategy that keeps your payments manageable while securing your financial future.

On April 16, 2025, the Bank of Canada announced its decision to maintain the policy interest rate at 2.75%, marking the first pause after seven consecutive rate cuts since June 2024. This decision reflects the central bank's cautious approach in navigating the economic challenges posed by ongoing trade tensions with the United States.

Key Factors Behind the Decision

The Bank of Canada cited significant uncertainty surrounding U.S. trade policies and tariffs as a primary reason for holding the rate steady. Governor Tiff Macklem emphasized that the unpredictable nature of these trade disruptions has made it difficult to project economic growth and inflation. While inflation slowed to 2.3% in March, the central bank remains vigilant about balancing the downward pressure from a weaker economy and the upward pressure from higher costs.

Economic Implications

The Canadian economy has shown signs of slowing, with weakened consumer and business confidence. Trade tensions have disrupted recovery in the labor market, leading to a decline in employment and moderated wage growth. Additionally, consumption, residential investment, and business spending have softened, further highlighting the need for careful monetary policy decisions.

Looking Ahead

The Bank of Canada outlined two potential scenarios for the economy:

1. Limited Tariffs: Growth weakens temporarily, and inflation remains around the 2% target.

2. Prolonged Trade War: Canada could face a year-long recession, with inflation temporarily rising above 3%.

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While the future remains uncertain, the central bank is prepared to act decisively if new information points clearly in one direction. For now, Canadians can expect the policy rate to remain at 2.75% as the Bank of Canada continues to monitor the evolving economic landscape.

This announcement underscores the importance of staying informed about monetary policy and its impact on the economy. Whether you're a homeowner, investor, or business owner, understanding these decisions can help you navigate financial challenges and opportunities in the months ahead.

High-interest debt from credit cards or loans can make it hard to efficiently manage your finances and can lead to falling behind on payments; even minimum payments can be tough to make when debt gets out of control. If you have the equity available in your home, a debt consolidation mortgage may be able to help.

A debt consolidation mortgage is a type of refinance that combines 2 or more liabilities into one mortgage or a home equity line of credit, or HELOC. The reason that this could be a great option to help pay down debt is that once all the liabilities are paid off, you are left with one payment rather than multiple payments. It can be easier to manage the one payment than cover a bunch of payments that seem to keep growing over time.

Another benefit of using a debt consolidation mortgage is that the interest rate will likely be much less than the rate being charged on credit cards and loans. It is common to see credit card interest rates above 20% versus a mortgage or HELOC rate that will likely be considerably less. The lower interest rate will assist in being able to get ahead of your debt since less of your monthly payments will be going to pay interest, and seeing balances grow month by month may be eliminated.

It is important to mention that before entering into a debt consolidation mortgage, a budget should be prepared to ensure that the debt consolidation mortgage will put you into a better position. Even though this is usually the case, a calculated and detailed budget can provide evidence of the better position. While going through the budget and liabilities, it is also important to review interest rates on existing liabilities to ensure that they are not less than the planned mortgage or HELOC rate. Unless the lender required it, there wouldn't be much sense in paying of a low interest car loan with a mortgage that may feature a higher rate.

While reviewing the budget and mortgage options, it is also important to consider if the debt consolidation mortgage should be used for any existing mortgages on your property, or if it is better to leave the existing mortgage in place and use a HELOC or second mortgage to consolidate the debt. Much like using a debt consolidation mortgage to pay out a low interest car loan, it likely wouldn't make sense to pay out a mortgage with a low rate, or incur a large penalty to break the current mortgage. The potential higher rate on the mortgage or penalties may erase any potential savings from the debt consolidation.

Since debt consolidation scenarios can be wide-ranging and there are many moving parts to them, especially when loans and mortgages are involved, I will focus my example on consolidating credit card debts and a personal line of credit into a home equity line of credit. This basic example will show the cash flow and interest savings that can be found by moving multiple high interest debts into one liability and monthly payment.

Let's say that clients have total credit card debt of $40,000 at 20.99% with a combined minimum monthly payment of $1,200, and a personal line of credit of $20,000 at 12% with a minimum monthly payment of $300. The monthly interest cost on these debts would be roughly $900 and the combined minimum monthly payments would be $1,500. 

By consolidated these debts into a $60,000 home equity line of credit we can not only reduce the monthly payment and increase cash flow; but, we can also save a substantial amount of interest expense. For the purposes of this example, I will use a home equity line of credit rate of prime + 4%; however, it should be noted that depending who your mortgage is with, a HELOC may feature a rate in the neighborhood of prime + 1%.

As of the time of writing this podcast, prime is currently 6.45%, which means our example is going to use a rate of 10.45%, which is not far off of the personal loan interest rate; but, is much lower than the rate on the higher balance credit cards.

Using the interest rate of 10.45% for the home equity line of credit, the monthly interest cost would be $523 and the minimum monthly payment would be lender specific and would need to cover at least the interest and some principal; let's say for example, the minimum monthly payment is $623. Using this example, we have an interest savings of $377 per month, or $4,524 per year and extra cash flow of $877 per month.

As mentioned previously, it is important to ensure that a debt consolidation mortgage is the right solution and will actually put you in a better financial position. A Mortgage Broker will be able to calculate your savings and assist with building a budget to make sure that the planned debt consolidation solution is in your best interests when presenting all the benefits and drawbacks. A full review will also indicate which debts should be included and which debts may be able to be left in place in order to maximize your savings.

In conclusion, a debt consolidation mortgage is basically a mortgage refinance or the addition of a home equity line of credit or additional mortgage. The funds advanced from the lender are used to pay out higher interest debts and consolidate them all into one lower payment with less interest expense. It is important to review your options with a Mortgage Broker to see if it is the right solution for you and find out how much you can potentially save by consolidating your debt!

In order to make sure that every client's file is set-up for success right up to and past closing day, Mortgage Foundations follows a Client Journey. Today, we will discuss the steps involved throughout the Client Journey and explain what happens at each step in the process.

The first step in the Client Journey is the Discovery Call and Mortgage Application step. This is where we learn as much as possible about your mortgage application and ask questions to ensure we are clear about your goals and requirements for your home financing needs. During this step we also answer any questions that you may have in order to find out the benefits of working with a Mortgage Broker, specifically Mortgage Foundations. We will also take this opportunity to give you an accurate idea of what to expect through the home financing process and ensure that you are aware of closing costs and document requirements so there is little room for surprises later.

The next step may not always be required since you may have already secured a property or are looking for home financing options other than purchasing a property; such as a switch or re-finance. If you are actively searching for a property, or planning to shortly, the Mortgage Pre-Approval step is highly recommended as it will allow us to submit your file to a lender that will review everything and ensure that nothing has been missed and it will give them the opportunity to ask any questions ahead of time for further clarity on the file. A pre-approval is also an opportunity to obtain an interest rate hold so that you can shop for a property with the confidence of having a rate in place. The rate hold will protect you from interest rate increases up to the expiration of the pre-approval. If rates end up coming down below your rate hold by the time you secure a property, you will receive the lower rate. Pre-approvals are conditional, and since they have been generated based on some unknowns, such as the property, a condition of financing is always recommended, even with a pre-approval.

While you are shopping for your next home, we will be sure to keep in contact and always recommend that you run any potential properties by us so that we can check the qualifying using the actual figures for the property. During this time, it is also important to keep everything as-is in regards to employment, liabilities, bill payments, and your credit profile overall. Unexpected changes to these things could end up affecting your qualification when you do find a property and we submit for a commitment.

Speaking of a commitment, that is the next step in the Client Journey. Once you have obtained an accepted offer on a property, we can then re-work the file and update any information that needs to be and then submit for what is commonly referred to as a live submission. At this point, the lender will review the file completely, including the property information, and also ensure that it meets the insurers' guidelines if it will be an insured or insurable mortgage. Once the lender confirms everything is good and that they are in a position to approve the mortgage they will issue a commitment. The commitment will include any conditions that need to be met by a certain amount of time ahead of closing day. We always strive to get as much documentation up front; however, it is usually at this step where we request additional documents in order to satisfy the lender's conditions. Once you have received the commitment, reviewed it, and are comfortable that you will be able to meet the conditions, we arrange to have the commitment and other documents signed and returned to the lender. This is also where we discuss the importance of having coverage such as Mortgage Protection Plan, or MPP in place, since anything can happen and you will want to ensure that you and your family are protected. Coverage can even start ahead of closing while we are working on clearing the conditions of your mortgage.  

Working together to get the conditions satisfied well ahead of time is imperative to make sure that the lawyer, or solicitor, can get to work on their side nice and early, since the lawyer getting instructed by the lender is the next step once we are broker complete or close to. Your lawyer will receive all their documents with instructions on what needs to be done for the lender to supply the funds to close the mortgage on closing day. We will be there to assist your lawyer with anything they may need from us to make for a seamless process for them.

Once your lawyer has everything prepared for your closing, they will reach out to set a date and time with you to perform the final signing and will also let you know how much funds you will need to supply them in order for the mortgage to close. This amount will be comprised of your down payment, legal fees, registration costs, land transfer taxes, title insurance and any other adjustments, taxes or fees that apply. It is also important that you make sure to take up to date valid identification to your meeting with the lawyer since they are required to confirm your identity.

After the signing is complete and everything is ready to go, we proceed to the biggest and most exciting step, which is the closing day. This is the day where everything happens, and all the money moves around between the lender and the lawyers, and the final registrations are taken care of. Once the seller's lawyer confirms that they have received the funds to complete the sale, you will receive the keys to your new property. If the transaction was a switch or re-finance, it is very much the same; money just moves in different directions.

Now that your mortgage is closed and you have received your refinance funds or are settling into your new home, our job is far from over. We will follow-up with you shortly after closing to make sure that everything went smoothly, remind you of when to expect your first payment to come out, and answer any questions that you may have. After this, we will continue to remain in contact, including on your annual mortgage anniversary, where we will update you with property information and can work with you to review your mortgage to ensure that it still fits your goals and is suitable for any potential future changes. As your dedicated mortgage professional, we are always there for any advice or to answer any questions you may have since the client journey is ongoing.

Today, I am going to discuss private mortgages, the difference between the types of private mortgage lenders, as well as explain some common uses and risks of a private mortgage.

First, it is important to note that a private mortgage is not for everyone, and your Mortgage Broker should exhaust all other options before recommending a private mortgage. Further, a private mortgage should only be used as a short-term solution with a clear exit plan.

When it comes to private mortgage lenders, there are mainly two different types, and one is more similar to an alternative lender than a private. This type of lender is called a Mortgage Investment Corporation, or MIC for short and then we have the regular individual private mortgage lender. There are some important differences between the two, and these differences need to be considered when deciding to proceed with either of the lenders. 

A Mortgage Investment Corporation is a collection of private investors that pool their funds together by buying shares in the corporation, much like a regular investment. The funds are then handled by the funds manager and used to fund many different mortgages through Mortgage Brokers looking for a solution for their clients when other options are lacking. A Mortgage Investment Corporation is provincially registered and requires a license to operate.

An individual private mortgage lender is a single investor that funds a mortgage using their own investment capital. This type of private lender does not need to be registered or licensed; however, they do need to operate with a licensed Mortgage Brokerage in order to lend their funds.

A private mortgage solution can be required for many different reasons, such as an unconventional property type that a conventional lender won't entertain, a new construction property, a poor credit score and history that doesn't fit conventional lender guidelines, the need for a quick closing, or even a debt consolidation solution.

As mentioned previously, no matter the reason for requiring a private mortgage, nor the type of private mortgage lender, in most cases, a private mortgage should only be a short-term solution and there should be a clear and reasonable exit strategy from the private mortgage. Even though a private mortgage may be renewable at the end of a term, renewing a private is not normally a viable strategy and may prove to be costly.

In most cases, a private mortgage will have a monthly payment, just like a conventional mortgage; however, will likely be comprised of interest only. This means that at the end of the term of the private mortgage, the amount owing will be the same or greater than the amount that was advanced on closing day. Some private mortgages do offer blended payment options; but, the payment will usually be comprised of mostly interest, with little being paid towards the principal.

Private mortgages are commonly offered in shorter terms when compared with a conventional mortgage. This fits perfectly with the fact that private mortgages are a short-term option. A common term for a private mortgage is one year and may be open, meaning it can be paid out at any time, or closed, meaning there will be a prepayment penalty if it is paid out early.

When it comes to the interest rates of a private mortgage, they are higher than a traditional lender and are set by the lender based on their source of funding and risk appetite, as well as their rate of return to their investors. It is not un-common to see private mortgage rates above ten percent; however, there are many private mortgage lenders that have competitive interest rates not very far off of a conventional alternative lender.

There are also fees involved with a private mortgage, and it is very important to pay attention not only to the fees to enter the private mortgage but also the fees and costs to get out later on. Your Mortgage Broker should review the lending documents fully and be able to communicate all fees clearly, as well as costs that should be expected, and also outline any fees that may come up later on. A great interest rate on a private mortgage may not be all that great when the fees and costs are added on and the Annual Percentage Rate is calculated.

Common fees associated with a private mortgage are lender fees, broker fees, appraisal fees, set-up fees, administration fees and increased legal fees. Potential future fees, such as renewal fees or prepayment penalties, should be clearly understood ahead of time so there are no surprises later on.

Before proceeding with a private mortgage, you should ask your Mortgage Broker if they have dealt with this lender previously, or if they are aware of their business practices and how they handle their mortgages, not only at the start; but, throughout the term to the end as well. This includes how they handle renewals in case one is required in the future. Online reviews are important as well; however, keep in mind that many of the negative reviews maybe from past clients who simply were not made aware of the pros and cons of the mortgage they were being put into. This is where full disclosure and transparency comes in and should be of the utmost of importance for all types of mortgages, especially private mortgages.

In as many weeks, Canadians got another big announcement when it came to mortgages last week, and it may lead some to think, what's next? After the federal government announced surprise changes to amortization and maximum purchase prices for insured mortgages a couple weeks ago, the Office of the Superintendent of Financial Institutions seemed to have a hold my beer moment and made a huge surprise announcement themselves, this one was around uninsured, or conventional, mortgages.

First, who is the Office of the Supervisor of Financial Institutions, or OSFI for short? OSFI is an independent agency of the government of Canada that regulates and supervises financial institutions, in order to contribute public confidence in the financial system. Being independent, even though they are a part of the federal government, they are able to set their mandates and make decisions independently of government intervention.

Last week, OSFI announced that effective November 21st, they would scrap the requirement for financial institutions to stress test clients when the clients are looking to switch their uninsured mortgage from one lender to another. This is a huge win for mortgage holders as it now makes it easier to obtain the most competitive mortgage rates and products when your mortgage comes up for renewal, even if they are not with your current lender.

Currently, if someone wanted to switch their mortgage to a new lender, they would have to prove that they could afford the mortgage at a higher rate, also known as the stress test, which qualifies the mortgage at 5.25% or the contract rate + 2%, whichever is higher. The issue here is that by having the stress test in place, it could effectively block you from switching a mortgage that you are already affording to a new lender because the stress test may say you actually can't afford it.

This potential roadblock could possibly lead to your lender offering higher rates because they may think, or know, that you have nowhere else to go and will have no choice but to renew with them at whichever rate they offer. It is important to note that OSFI has said that it has found no evidence of this happening; however, the potential does present an unfair advantage to your current lender.

This potential unfairness was the subject of a Competition Bureau recommendation to OSFI this past March that was actually turned down by OSFI where they announced that they had no plans to remove the stress test on uninsured mortgages when a client was looking to switch lenders. As part of its recommendation, the Competition Bureau criticized the rule and said that switching lenders and promoting fairness should be focused on more than discouraging the practice.

Six short months later, OSFI makes a complete 180 and will now allow the increased competition. As mentioned this is a huge win for mortgage holders, especially ahead of the next few years, which are set to have the most mortgages coming up for renewal.

To summarize the change, when your uninsured mortgage comes up for renewal and your lenders offers you renewal options, you can now shop your mortgage with a Mortgage Broker to see which lenders would offer competitive interest rates and products that would allow you to switch your mortgage to them by qualifying at the actual contract rate, not the higher rate. You do still need to qualify to prove that you can afford the mortgage; however, you don't need to qualify at an inflated rate presented by having to use the stress test. This may even lead to your current lender offering more attractive renewal rates since they know there will no longer be the obstacle that could stop you from reviewing other options.

Overall, this is an announcement that has been advocated for by the mortgage industry for a long time and ensures fairness to Canadian mortgage borrowers. It has been a big couple of weeks with a few surprise announcements to rules and regulations that Mortgage Brokers have been pushing for and up to now thought that there would be no movement by the regulators in charge of them.