Category Archives for Conventional Mortgage

More Aggressive Conventional Mortgage Qualifying

“Lenders Reducing The Qualifying Requirements For Shorter Term Conventional Mortgages”

For the last year or so, most of the major banks have been using their 5 year posted rate when qualifying a borrower’s application for a conventional uninsured mortgage.

The 5 year posted rate impacted all debt servicing calculations for variable interest rate terms as well all fixed terms under 5 years.

The end result of using the 5 year posted rate was that the debt servicing was higher than what would be in affect at the time the mortgage was closed, making mortgage qualification more difficult for some individuals.

At the present time, CIBC/Firstline, Scotia Bank, and RBC have softened their criteria and are each using some combination of their three year posted rate and the contract rate to qualify short term conventional mortgages.

For more information, you can go to an article from this linkĀ

Because the conventional mortgage market is so competitive, it stands to reason that the rest of the majors will likely be following suit some time in the near future.

In the mean time, the different financing criteria now in place in the market can impact your borrowing application and should be taken into consideration if you are going to be tight on the debt servicing calculation.

At the same time, this change in practice is only going to be relevant to borrowers that have at least 20% equity in their homes as any mortgage amount above 80% loan to value requires mortgage insurance, which has different repayment assessment criteria.

If you would like to know more about how to take advantage the lower qualifying rates or learn more about it, please give me a call at your earliest convenience and we can set up a time to discuss it further.

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