I am always a little apprehensive in making predictions on the market place, especially with regards to the broader economy of Canada. Therefore, I leave this responsibility in addressing those types of questions to DLC's Chief Economist, Dr. Sherry Cooper. Dr. Cooper's full commentary on whats in store for the Canadian Economy in 2019 can be found here:
https://dominionlending.ca/news/whats-in-store-for-2019/
What I can comment on is what financing may look like in 2019, specifically applying for a mortgage. With a lot of government intervention in the past 24 months and subsequently lender policy adjustments, navigating the lending environment is the largest challenge.
Which lenders approve what, why and how tends to come up a lot. I believe a very large advantage clients and referral sources will get is using a mortgage broker in 2019. Specifically mortgage brokers that are experienced and are set up with multiple lending options; banks, credit unions, trust companies, monoline lenders and private capital to name a few options in Canada.
It appears, lenders are trying to grasp how to implement certain policy changes and it does not appear to be completely consistent or going to become consistent in 2019. This means one lender may interpret the policy different then another lender and in turn allowing for one institution to decline a mortgage that another lender will approve. Access to different lenders is going to be extremely important and going to be my first prediction. Consumers buying, refinancing and renewing are going to want choice and access to different lending solutions.
My second prediction is that clients that are business for self are going to need support in obtaining a mortgage. These clients face multiple hurdles. With the majority of clients that are business for self, strategically filing low personal income or not enough to qualify for their dream home, they are going to require creative lending solutions. Stated income products have almost been completely eliminated from lending, except for a few, and far in-between, that allow for business financials in supporting the personal residential purchase, refinance or renewal. There are some great lenders that support clients that are business for self but there is a premium be it rate and/or set up cost that may need to be considered.
My third prediction is that clients are going to need more specialty products. An example is a loan to support a client that purchases a new home and the existing home has not sold. The client needs to qualify to carry both loans and becomes more of a challenge. Not to get confused with a bridge loan - A bridge loan is when a client purchases a new home and the existing home sells but the closing date on the sale is past the closing on the purchase. Both of these products have solutions with the first (demand loan) being more unique and not necessarily available through the traditional banking channel.
Another example is land acquisition and construction financing. A complicated product most of the time but for clients purchasing to flip or as investment, the traditional lending channel has reduced dramatically. Financing is available but is creative in nature and not available through the traditional channels, again reaffirming, my first point, in which choice is going to be paramount in 2019.
To conclude, I am not pessimistic or apprehensive with regards to the mortgage market place. I am actually very confident. Whenever there is change the mortgage industry has proven to be resilient. It looks and feels different in 2019 then in years past but there has never been more solutions and lenders available that I can remember. The approval process is harder, the documentation requirements seem very intense and at times mortgage lending can feel very complicated. The good news is that aligning yourself with the right partners helps ease the change and provide similar results in the past, its just a different way in getting there.
My tips for anyone applying for a mortgage in 2019 is as follows:
-Be organized and prepared. Have your documents in order. (specifically income and down payment documentation). If you don't know what documents to collect, ask a mortgage broker or banker to provide and get organized. It makes the process quicker and more likely to be approved.
-Get pre-approved! Don't wait until you buy, assuming the process you used in the past is the same as in 2019. Getting pre-approved will ensure you qualify using 2019 underwriting guidelines.
-Find an expert. Work with people you can trust and have experience. An expert should have access and options covered and be able to find the best terms. Experts navigate change well and can be the difference between approval and not.
-Download our new app:
https://www.dlcapp.ca/app/scott-westlake Our mortgage app includes everything you need to estimate your home ownership costs. Includes mortgage payments, stress test, closing costs, rates and much more!
For any inquires please email scott@thewestlaketeam.com or call 416-436-1135
Scott Westlake
The Westlake Team
DLC National, FSCO 12360
E: scott@thewestlaketeam.com
C: 416-436-1135