Hopefully by now you have started to reach out to your clients to discuss their mortgage needs. If not, what are you waiting for? These are missed opportunities to help your clients, grow your business, and earn a referral fee for simply introducing them to QFS Mortgage and Lending.
At some point during the conversation, the question that will come up is “What is your best rate?”
Well, the short answer is, it depends.
With the numerous changes to mortgage regulations over the past few years, lenders have taken the approach of essentially using cost-based pricing in their mortgage rate offerings.
A mortgage will fall into one of three main buckets - Insured, Insurable or Uninsurable.
Insured –a mortgage transaction where the insurance premium is or has been paid by the client. Generally, less than 20% equity to apply towards a mortgage.
Insurable –a mortgage transaction that is portfolio-insured at the lender’s expense for a property valued at less than $1MM that fits insurer rules - qualified at the Bank of Canada benchmark rate over 25 years with a down payment of at least 20%.
Uninsurable – a mortgage where the property value is greater than $1,000,000, mortgages that have been refinanced since the rule changes, single unit rental properties, amortizations greater than 25 years.
Because lenders are now limited in the way they can insure their book of business, they have increased the cost of a mortgage to help offset the risk of future client defaults, fraud, property value loss, and are essentially self insuring their portfolio of mortgages.
As a result, Insured mortgages will have the cheapest interest rates, followed by Insurable with slightly more expensive rates, and Uninsurable bringing up the rear with the highest rates.
If this wasn’t enough to keep track of, there are numerous grey areas intermingled with these new rules where properties can essentially be grandfathered into a more favourable bucket if the mortgage meets certain other criteria.
So, what does this all mean?
It means that your clients will greatly benefit from speaking to a mortgage broker that can navigate the current environment and put them in the best possible position both short and long term.
By speaking with your clients, filling out the mortgage tracking form with them and sending it my way, together we can help them realize the best financial outcome possible.
Here you will find current mortgage rates.
Paul Sarantis, CPA, CA
FSCO Lic# 13009
QFS Mortgage and Lending
Tel 647.776.4013 | Fax 647.776.0974