Property investors may be looking to capitalize on the hot market for many rental buildings, but will they qualify to buy again given new lending guidelines? Jemima Codrington reports.
Video transcript below:
Jemima Codrington: Flaherty’s new mortgage rules of course are stirring the industry. But there are several changes that have taken place behind the scenes that investors may not even know about. We get the scoop in this week’s Investor Insight.
Dustan Woodhouse, Our Mortgage Expert
Dustan Woodhouse: These days I would say that the most important question to ask a broker is, “do they qualify for the existing mortgages they currently have?” Because if they are contemplating disposing off a property, they may well not be able to replace it. And that isn’t just investment properties, it’s owner-occupied properties.
There’s been a lot of media coverage of the various changes that Mr. Flaherty brought in through CMHC, but there’s been a lot less coverage of several significant changes that have come in through the banks, primarily the chartered banks that have been affected. Over the last couple of years the buildup was on credit, good clean quality credit and that still matters.
But over the past few months, the past few weeks in particular, the focus is primarily on documented income and by the documented income I mean on your tax return, your line 150 income, excluding any dividend income, excluding any RSP meltdown, it’s all about what your salary actually is and for the great majority of self employed individuals, it’s going to create some big hurdles moving forward for getting mortgage financing.