Category Archives: mortgages

Braving the Wilds as a Self-Employed Borrower


Self-employed – The fastest growing group of alternative borrowers, business for self-clients sometimes struggle to provide income verification that meets the conditions required by prime lenders. With 1 in 5 working Canadians now in business for themselves, this is an important segment that deserves extra consideration for your marketing efforts.

Amy De La Hunt, a writer and editor in St. Louis, gathered mountains of documentation last year to apply for a mortgage as a self-employed borrower.

She had several years of tax filings and contracts to establish a track record for her income. Then, midway through the process of buying a home in suburban Crestwood, she started a full-time job.

“Once I had only one pay stub from my full-time employer, then everything was like magic,” De La Hunt said. “It opened my eyes to how much easier it is.”

For all the benefits that being self-employed imparts, getting a mortgage is not among them.

Self-employed borrowers receive six loan quotes for every 10 received by people pulling down W-2s, according to a Zillow Mortgages analysis.

Lower credit scores are one of the primary factors, according to the analysis, which used a database that logs nearly 2 million loan requests a month.

Among self-employed workers, 47 percent have self-reported credit scores below 720, compared with 23 percent among those who are not self-employed. That’s despite the fact that self-employed borrowers report household incomes that are 81 percent higher and make larger down payments than those who are not self-employed.

Business vs. personal debt

The lower credit scores might not always be a reflection of a self-employed borrower’s ability to pay, said Staci Titsworth, regional mortgage sales manager for PNC Mortgage in Pittsburgh.

Some business owners take out car loans and open credit card accounts in their own names, even though these are strictly for company use. That boosts the business owners’ debt volume, which can count against their credit score, Titsworth said.

Lenders can sort through situations like this, but it takes paperwork — on top of copious filings already required of self-employed borrowers (two years of personal tax returns with all schedules attached, plus two years of business tax returns for each business).

Loyal customers with a solid history of making loan payments are often incredulous at how much paperwork is required — and how inflexible the rules are, Titsworth said.

“It can be overwhelming for someone who’s successfully self-employed, who owns all these businesses and is a loyal bank customer, to hear us say we’re missing this one schedule from 2013. They’re like, ‘Are you kidding me?’” she said.

Some people will respond, “You can see I have enough cash to pay for this house; isn’t that good enough? And we have to say, ‘No, we need that paperwork,’” she added.

Keep calm & gather documents

The good news is that, at the other end, it’s entirely possible for many people who are self-employed to qualify for a mortgage.

“A lot of people think artists can’t ever buy homes, or that if you’re self-employed, you can’t buy a home — but we’re here and we each have our own studio and a weekend house,” said Linda Hesh, an artist in Hollin Hills, VA, who lives in a mid-century modern home with her husband, hand engraver Eric Margry.

They’ve been through the home financing and refinancing process many times. They found at the start that lenders wanted a larger down payment from them than from people who weren’t self-employed.

And then there’s the paperwork.

“You just have to do it; it’s going to be a lot of pages,” Hesh said.

She recommends finding a real estate agent who’s comfortable working with self-employed borrowers, because “they can be really helpful.”

So can staying calm, she said.

Source: – BY ON 19 DEC 2014

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Mortgage rates, charges decisive factors for consumers

A combination of reasonable mortgage rates, no unexpected charges, and special features were the most important factors in consumers’ choice of mortgage originator, according to a recent survey conducted by financial services firm D+H.

The study’s results accompanied the increased popularity of the internet as a valuable resource for would-be borrowers, giving them more confidence in their transactions as well as making them more wary of hidden fees.

“People are asking the right questions. Even a caveman could find the lowest mortgage rates online within seconds. What you can’t learn as easily are the hidden costs, including mind-blowing penalties, inflated blend and increase rates (the rates lenders charge on any new money you add to your mortgage), ridiculous rates to convert from a variable mortgage to a fixed, aggravating fees to switch lenders, restrictions when porting your mortgage, and so on,” mortgage columnist and founder Robert McLister wrote in a February 28 piece for The Globe and Mail.

McLister stated that the results pointed at the growing importance of a second informed opinion, apart from online information, in determining the best mortgage rates available.
“It’s no surprise, then, that two out of three borrowers value the person arranging their mortgage more than the lender itself. And they should. Lender reputation is immaterial compared to proper guidance and mortgage flexibility,” McLister said.

The survey also revealed that the largest contributor to consumer satisfaction is the absence of time pressure, which can be achieved by the broker going the “extra mile” to assist with the details.

“Besides time pressure, the survey found the biggest headaches for borrowers were paperwork, uncertainty about getting the best rate and finding the time to meet with a banker or broker,” McLister noted.

Source: – by Ephraim Vecina | 02 Mar 2016 

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Five things to know about new mortgage rules that came into effect Monday

New federal rules for Canadian mortgages have now gone into effect.

The changes affect properties that cost more than $500,000 – a small percentage of the overall market.

Buyers can still have a five per cent down payment on the first $500,000 of a home purchase but must now put at least 10 per cent down on the portion above $500,000.

Finance Minister Bill Morneau has said the new measure – effective Monday – aims to ensure buyers have sufficient equity in their homes.

Lenders also face new capital requirements to keep pace with the growing risk of the real estate markets that they bankroll.

And Canada Mortgage and Housing Corp. will change the fees it charges issuers of mortgage-backed securities.

The Finance Department has tightened mortgage rules on several occasions in recent years – along with requiring stricter enforcement and management of loans – to weed out marginal buyers and speculators

Here are five things to know about the new rules:

Cough up the cash: Homebuyers now have to put at least a down payment of 10 per cent on the portion of the price of a home over $500,000. For anyone buying a home for $700,000 — a common list price in Vancouver and Toronto — that means the minimum down payment will rise to $45,000 from $35,000. Any home under $500,000 still requires only a down payment of five per cent.

Who’s affected: Primarily those shopping for a home in Toronto and Vancouver. First-time buyers in those cities will feel the pinch since they’ll be required to put down bigger down payments to get into the market. Those selling their homes in order to size up, especially in cities with hot housing markets, likely won’t feel the pain since they’ve built up equity in those properties.

Impact: The influence the new rules will have over house prices is expected to be small, experts say, given their narrow reach. When he announced the changes in December, Finance Minister Bill Morneau said they are expected to affect one per cent or less of the real estate market.

Sales activity: Some analysts expected a surge in sales leading up to Monday’s changes, saying they would lure homebuyers who wanted to avoid making the bigger down payments. Royal LePage CEO Phil Soper says sales activity has been “boisterous” in Ontario, B.C. and Quebec in the first five weeks of this year, but he credits a relatively mild winter and low mortgage rates.

Past measures: Four rounds of changes were made to tighten eligibility rules for new insurable loans between 2008 and 2012. Among them: the minimum down payment was increased to five per cent, the maximum amortization period was reduced to 25 years from 30 years and the maximum insurable house price was limited to below $1 million.

Source:  THE CANADIAN PRESS Posted Feb 15, 2016

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…mortgages made simple…



The Ray McMillan Mortgage Team  is licensed through Northwood Mortgage Ltd. We deal with major banks, trust, life insurance, finance companies and private lenders. We are licensed to provide the most competitive mortgage rates and terms available for your real estate financing needs throughout Ontario.



  • First and second mortgages
  • Transfers
  • Condominium/Townhouse purchases
  • Home Improvement Loans
  • Construction Loans
  • Debt Consolidation
  • Refinancing
  • Power of Sale
  • Multi-residential
  • Vacant land
  • Cottages and recreational properties
  • Rural and farm properties




When we arrange a prime residential first mortgage the lender pays us a finder’s fee.This does not affect the rate our terms of the mortgage in any way.

When we arrange any other type of mortgage that does not qualify as a prime residential mortgage then the lender does not pay us. We must then charge a brokerage fee*. The fee is based on the complexity involved to arrange the mortgage.


You have mortgage questions, the Ray McMillan Mortgage Team has answers.

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BREAKING NEWS: Bank of Canada holds key interest rate steady at 0.5%

Bank of Canada Governor Stephen Poloz twice cut the central bank's benchmark interest rate year in an attempt to stimulate the economy.

The Bank of Canada today maintained its benchmark interest rate at 0.5 per cent.

The rate affects the saving and borrowing rates that Canadians get from their lending institutions banks. The central bank cut its rate twice last year in an attempt to stimulate the economy.

Headed into the decision, economists were evenly split as to whether the bank would cut again or stand pat.

More to come


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Take advantage of low interest rates while they last

Interest rates are low enough today that it’s pretty cheap to get caught up on your savings. (istockphoto)

When I was young, I remember going to the bank to have my bank book updated by the teller. I would always appreciate seeing the “interest deposit” line every month. This week, our youngest son went online for the first time to view his bank account activity. There it was: an interest deposit made at the end of last month.

“Dad, the bank gave me some money,” he said.

“I know, Michael. Isn’t that great?” I replied.

“Sure, but it’s just four cents,” he said.

“Well, interest rates are very low right now,” I told him.

“So, with the amount of money I have today, it will take about 83 years before I have enough to buy a scooter.”

“That’s right, son. I tell you what. When you reach age 50 and you haven’t got enough for that scooter, I’ll give you the rest.”

The Bank of Canada’s key interest rate dropped to just 0.5 per cent last summer, so interest rates are just about rock bottom. This is bad news for those interest deposits each month, but good news for taxpayers. Consider one of these strategies today to take advantage of low interest rates while you can.

1. Borrow for RRSP contributions

It’s the time of year to think about making a contribution to your registered retirement savings plan (RRSP). The deadline for contributions that can be deducted on your 2015 tax return is Feb. 29, 2016.

If you have significant unused RRSP contribution room, it can make good sense to take out an RRSP catch-up loan to use up that room and create a sizable tax deduction.

Although you won’t be able to deduct the interest on a loan to contribute to your RRSP, interest rates are low enough today that it’s pretty cheap to get caught up on your savings. Try to pay back the RRSP loan within a year, but even a three- or five-year loan can make sense if it means a shot in the arm to your savings.

2. Refinance your bad debt

There may be two key problems with your current debt: The interest may not be deductible, and your interest rate might be too high.

Based on current interest rates, consider consolidating any high-interest borrowing (such as credit cards or non-secured loans) into one lower-rate loan.

If you can, make your interest deductible at the same time. How? If you have any cash or investments available, consider paying down your non-deductible debt with that cash or those investments (count the tax cost first), then reborrow to replace the cash or investments. As long as you use the newly borrowed money for the purpose of earning income, you’ll be able to deduct the interest.

3. Borrow to invest

Borrowing money to invest can create a tax deduction for the interest costs. This is valuable at a time when tax deductions are in short supply.

Borrowing to invest can also help you to accumulate wealth more quickly, and with interest rates so low today, the cost of using someone else’s money to grow your wealth is low. Now here’s a caveat: Borrowing to invest is not for everyone. Most importantly, you need a stable income and a long time horizon. I’ll talk more about this next time.

4. Consider employee or shareholder loans

Now is a good time to consider borrowing from your employer or your own corporation. Why? You may be able to borrow at low or no interest.

You’ll face a taxable interest benefit in this case, but that benefit today will be calculated at the very low 1 per cent prescribed rate currently in effect. And if you choose to use those borrowed funds for investment purposes, or to buy a vehicle for use in your work, you’ll be entitled to claim a deduction for the amount of the interest benefit. Speak to a tax pro about shareholder loans, because the rules are complex.

5. Make a loan to your spouse

It can make good sense to lend money to your spouse to invest if he or she is in a lower tax bracket than you. The income earned by your spouse can be taxed in his or her hands if you charge the taxman’s prescribed rate of interest on the loan – which is just 1 per cent today.

The best part is that you can lock in that rate of interest indefinitely. Your spouse should sign a promissory note as evidence of the loan, and should pay you any interest owing by Jan. 30 each year for the prior year interest charge.

Source: Special to The Globe and Mail Published Thursday, Jan. 07, 2016  by Tim Cestnick

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It’s time for many Canadians to abandon the 20% down-payment rule

The convention of 20-per-cent down payments is right on the money ... but not if you’re set on buying in a hot market. (BNN Video)

This one’s for the housing true believers out there.

You’re the buyers who keep pushing house prices higher in cities such as Vancouver, Toronto and Hamilton. Incomes are edging higher in these cities, prices are surging. If you’re primed to buy anyway, then listen up. Stop trying to save a 20-per-cent down payment and get into the market now.

A popular and sensible bit of financial advice is that you should ideally wait to buy a house until you have a down payment of at least 20 per cent and thus are excused from buying mortgage default insurance. But if it takes a few years to save that much, you may find that soaring prices more than offset the savings on mortgage insurance.

This insurance got a little more expensive in some cases this summer, so it’s time for a fresh look at the case for avoiding the cost of buying it.

Background for housing rookies: If you have a down payment of less than 20 per cent, you have to pay a hefty premium to insure your lender in case you default on your payments. The amount is usually added to your mortgage principal, which means it’s out of sight and out of mind. But it still costs you.

With a down payment of less than 10 per cent (5 per cent is the minimum), the cost of mortgage insurance rose in June to 3.6 per cent of the purchase price from 3.15 per cent. Larger down payments short of 20 per cent were unaffected and range from 2.4 per cent down to 1.8 per cent. You’ll pay provincial sales tax on those amounts in Manitoba, Ontario and Quebec. More importantly, you’ll incur extra interest charges by adding these amounts to your mortgage balance.

Let’s use the average resale house price in Canada to illustrate how much mortgage insurance adds to your costs when buying a first home. The average price in August was $433,367 – a calculator from Canada Mortgage and Housing Corp., a supplier of mortgage insurance, shows that a 10-per-cent down payment would trigger a mortgage insurance premium of $9,361. With that amount added to the mortgage, monthly payments on a five-year fixed mortgage at 2.59 per cent would be $1,807 per month.

With a 20-per-cent down payment, monthly costs on this mortgage fall to $1,569. Total interest over the five-year term of the mortgage falls to $41,390 from $47,681, a difference of $6,291. But would it really be worth postponing your purchase by three years to put 20 per cent down? With the market rising at 5 per cent annually (less than recent increases in Vancouver, Toronto and Hamilton), the chart that goes with this column shows you’d actually end up paying more per month.

Mortgage rates also have to figure into your thinking on whether to buy now or wait and save more. If we assume 4 per cent average annual price increases over three years and a rise in mortgage rates of one percentage point, you’d have to pay substantially more than if you bought now and paid for mortgage insurance (see chart).

If you live in a city with a slow real estate market, it pays to wait and save more. If you waited three years to double your down payment to 20 per cent on the average-priced house and prices rose 2 per cent annually, you’d come out ahead by more than $140 per month.

A June study issued by the Canadian Association of Accredited Mortgage Professionals said the average house down payment for first-time buyers was $67,000. That represents a 21 per cent down payment on the average $318,000 spent by first-timers, and a 15.5-per-cent down payment on the overall average price of $433,367.

The CAAMP study found that 18 per cent of first-time buyers received gifts or loans from family. A thought for parents who want to help their kids get into the market: Try topping up their down payment to reach the 20 per cent threshold. Warning: Parents should avoid this type of financial help if they have to go into debt to provide it, or if it greases the way for their kids to buy a house they can’t properly afford to carry.

Down payments are one of the least strategized parts of home buying, and yet they can have a big impact on your total long-term cost of owning a house. The conventional wisdom about 20-per-cent down payments is right on the money, but not if you’re set on buying in a hot market. Either jump in now or resolve to wait and save indefinitely for sanity to return.

Source; ROB CARRICK The Globe and Mail Published Thursday, Sep. 24, 2015 7:06PM EDT

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