As a self-employed person myself, I was happy to hear that CMHC is willing to make some changes that will make it easier for us to qualify for a mortgage.
In an announcement on July 19, 2018, the CMHC has said “Self-employed Canadians represent a significant part of the Canadian workforce. These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates.” — Romy Bowers, Chief Commercial Officer, Canada Mortgage and Housing Corporation. These policy changes are to take effect Oct. 1, 2018.

Traditionally self-employed borrowers will write as many expenses as they can to minimize the income tax they pay each year. While this is a good tax-saving technique it means that often a realistic annual income can not be established high enough to meet mortgage qualification guidelines.
Plain speak, we don’t look good on paper.

Normally CMHC wants to see two years established business history to be able to determine an average income. But the agency said it will now make allowances for people who acquire existing businesses, can demonstrate sufficient cash reserves, who will be expecting predictable earnings and have previous training and education.
Take for example a borrower that has been an interior designer with a firm for the past eight years and in the same industry for the past 30 years, but just struck out on his own last year. His main work contract is with the firm he used to work for, but now he has the ability to pick up additional contracts from the industry in which he has vast connections.
Where previously he would have had to entertain a mortgage with an interest rate at least 1% higher than the best on the market and have to pay a fee, now he would be able to meet insurance requirements and get preferred rates.

The other change that CMHC has made is to allow for more flexible documentation of income and the ability to look at Statements of Business Professional Activity from a sole-proprietor’s income tax submission to support Add Backs of certain write-offs to support a grossing-up of income. Basically, recognizing that many write-offs are simply for tax-saving purposes and are not a reduction of actual income. This could mean a significant increase in income and buying power.

It is refreshing after years of government claw-backs and conservative policy changes to finally see the swing back in the other direction. Self-employed Canadians have taken on the burden of an often fluctuating income and responsible income tax management all for the ability to work for themselves. These measures will help them with the reward of being able to own their own home as well.

We have recently had two Bank of Canada increases with prime now at 1.0% vs .50% so one half point since mid year.
However prime remains in the all time ‘historical low’ category when you consider rates over the last 40 years.
How much more might prime go up? Not much more say most experts who predict one more small rate increase this year and a target high in 2018 of 1.5% which would mean a full 1% rate increase in a year.
Note that recent rate increases have been the result of a stronger than expected economy (not inflation) which is clicking on all cylinders as is employment growth. Have you noticed hiring signs just about everywhere?
A full point increase in prime over one year is considered to be a relatively low jump in prime lending and will leave the benchmark rate within the historical low category.
Conclusion? The current upward movement in rates is modest and should not be looked at with alarm. We all knew that rates could not stay at ‘rock bottom’ forever and now they are adjusting towards a new normal.
So, should you ‘lock in’ your current rate or choose a fixed rate mortgage versus variable next time around? The banks always say YES no matter what.
We say an emphatic NO for two very simple reasons. First we have irrefutable evidence that our ‘variable’ rate clients have fared extremely well over the past 10 years by choosing variable, meaning these folks have paid down their mortgages much faster than fixed rate clients have. Secondly, if you have a bank (collateral) mortgage then the bank can increase the rate ‘at their discretion’ on any and all secured debt you have with them; that is regardless of what prime rate does.
Actually, there is a third (big) reason. If you have a fixed rate bank mortgage and you decide to move before the end of term, you will suffer a severe (mortgage break) penalty. And if the bank tells you they will blend your new rate and not to concern yourself about the penalty, you still are hit hard and do not even know what penalty you pay. Remember all banks want you in a fixed rate mortgage vs variable so they can charge you the maximum versus the minimum three months interest penalty, which is why we continue to advise our clients to consider variable over fixed.
We have written many, many times that ‘rate’ is important but that the ‘terms’ can be even more important and damaging to your financial health in the longer run. Note any such mortgage break penalty from our lenders are up to 75% less.
It is still an opportune time to buy or refinance, and in fact with expected further mortgage qualification tightening which will affect everyone, if you are thinking of doing anything soon, you should do it now.
Our services are free of charge, OAC, and we guarantee you an equal or better than bank rate and superior terms. In other words, a better solution for you. If you are currently with a bank, we assure you that getting a second quote is absolutely in your best interest.

Finally bank greed has been exposed mainstream. We can only hope this is just the beginning because the pendulum has swung way way too far in the banks’ favour and it’s high time it be stopped. This time it is not just an isolated incident that a bank can sweep under the rug, it’s much much bigger.

CBC investigative news unit this week broke a huge story about TD Bank’s efforts to extract as much as they can from unsuspecting customers. TD bank tellers were interviewed and agreed to cooperate with CBC because they were assured they could do so anonymously.

When customers enter their PIN at a teller counter, a gold star informs the teller of ‘opportunities’ to sell the customer products. (CBC)

It actually all started with three TD bank tellers approaching CBC’s GO PUBLIC unit with their story because they couldn’t take it anymore. Since then retired bank employees, laid off employee and some managers have also joined into the fray.

Here are a few of the quotes. One said “We are under incredible pressure to sign clients up for products they don’t need.” “When I come to work I have to put ethics aside and not do what’s right for the customer.” Another said “Customers are prey to me. I do everything I can to make my (sales) goal.”

Elderly customers who trust the bank the most are the most vulnerable the news article points out. One employee said “Here I am setting them up with all these service fees and they don’t have a clue what’s going on.”

CBC also spoke to branch managers who are under the same pressures. No surprise there because this greed is corporate culture. “We’re told that our job is to make them (the tellers) understand that if they don’t achieve their sales ‘goals’ that they are no longer right for this job. I feel bad what they are making me do.”

When (good) managers expressed concerns to their supervisors, they were asked to consider whether they were still “a good fit” for the job, implying that their job might be in jeopardy.

Dear reader, ever time you put your PIN in you are a target to be upsold. That is sales. It’s not new. The problem is that big bank culture today has become sinister. It is one designed to extract every nickle, dime and dollar (in the thousands) out of you.

No doubt all big banks have similar or same business cultures and practices.

This evil juggernaut must be stopped so that we can trust our banks again because we need them. We need to rely on them to look out for their customers’ interests.

We have a long way to go folks. One can only hope that this is the beginning of the end to the invisible tyranny the banks deliver to Canadians one at a time, every second, minute, hour, week, month of the year.

Our voice as consumer (mortgage) advocate for the little guy and all Canadians for the last 12 years has finally been validated by national news.

We speak the truth. We care about you. We look after your best interests always. We get it. We need banks. When it comes to mortgages, it’s time to check your misguided loyalty and explore your options. We are here to help, guide and protect you.

Finally bank greed has been exposed mainstream. We can only hope this is just the beginning because the pendulum has swung way way too far in the banks’ favour and it’s high time it be stopped. This time it is not just an isolated incident that a bank can sweep under the rug, it’s much much bigger.

CBC investigative news unit this week broke a huge story about TD Bank’s efforts to extract as much as they can from unsuspecting customers. TD bank tellers were interviewed and agreed to cooperate with CBC because they were assured they could do so anonymously.

It actually all started with three TD bank tellers approaching CBC’s GO PUBLIC unit with their story because they couldn’t take it anymore. Since then retired bank employees, laid off employee and some managers have also joined into the fray.

Here are a few of the quotes. One said “We are under incredible pressure to sign clients up for products they don’t need.” “When I come to work I have to put ethics aside and not do what’s right for the customer.” Another said “Customers are prey to me. I do everything I can to make my (sales) goal.”

Elderly customers who trust the bank the most are the most vulnerable the news article points out. One employee said “Here I am setting them up with all these service fees and they don’t have a clue what’s going on.”

CBC also spoke to branch managers who are under the same pressures. No surprise there because this greed is corporate culture. “We’re told that our job is to make them (the tellers) understand that if they don’t achieve their sales ‘goals’ that they are no longer right for this job. I feel bad what they are making me do.”

When (good) managers expressed concerns to their supervisors, they were asked to consider whether they were still “a good fit” for the job, implying that their job might be in jeopardy.

Dear reader, ever time you put your PIN in you are a target to be upsold. That is sales. It’s not new. The problem is that big bank culture today has become sinister. It is one designed to extract every nickle, dime and dollar (in the thousands) out of you.

No doubt all big banks have similar or same business cultures and practices.

This evil juggernaut must be stopped so that we can trust our banks again because we need them. We need to rely on them to look out for their customers’ interests.

We have a long way to go folks. One can only hope that this is the beginning of the end to the invisible tyranny the banks deliver to Canadians one at a time, every second, minute, hour, week, month of the year.

Our voice as consumer (mortgage) advocate for the little guy and all Canadians for the last 12 years has finally been validated by national news.

We speak the truth. We care about you. We look after your best interests always.

The choice where to obtain a safe, friendly mortgage has never been so obvious has it? Just saying.