They charge less for a higher ratio mortgage because you have to pay for CHMC insurance separately. The loan is actually much less risky for HSBC because it's insured.

They'd give you the same rate with >20% if you chose to insure your mortgage, but nobody would because it's more expensive than just paying a higher rate.

-Mark

https://itools-ioutils.fcac-acfc.gc....HCalc-eng.aspx

This is a bit a clunky but it gives you a reasonable idea of what banks are able to loan you based on stress test rules. If you're borrowing near your limit one thing that can really screw with your max is how much is on your credits cards. I pay off my cards every month but I run my life through it so it always looks like I'm carrying a tonne of debt and the bank just looks at the balance you have at the time you apply and they don't care if you pay it off every month.

There's two ways to deal with this:

1) Before you apply clear your CC - if you have enough cash flow this is no big deal, just pay things off a couple weeks early.
2) Have your banker enter your balances as zero. This doesn't always work as they will pick up the balances during the credit check and may ignore your zero balance.

It appears my CC balance had a pretty meaningful difference in how much I could borrow - it worked out in the end as I'm getting JUST enough on the sale of my existing house to cover the downpayment on the new place but it could have turned out a lot worse/complicated.

You do know that with cmhc you are borrowing like another $15 to 20k on top of your mortgage that you are paying interest back to them on, so of course they will give you a better rate.:pokerface::facepalm:

Did you sell first, then buy? Or the other way around?

In this market, it seems like buy first then sell would be better but I don’t think the bank will even consider it. The $100k deposit is easy but what about the rest?

Sell first, then buy is a risky but at least I know what my budget will be.

It's not a question with a simple answer as everyone's situation differs.

For me, we had enough equity in our place and planned for a worst case scenario when we went to the bank. That gave us a rough idea how much we could offer which was accepted.
We did ask for a later closing date to allow our realtor time to sell and he was able to sell for above our worst case scenario so we were never up against our limits and was able to buy first and then sell.

We bought then sold (we're listed right now) as we knew we had the money for whatever outcome we had with the bank (and with however much we sell the current place for). It was a bunch of scrambling for us as we didn't expect to be buying a house so we weren't approved by the bank and our house was in no condition to sell - we spent the better part of 2 weekends decluttering it to make it attractive and our completion date for the new place is only 2 months away.

In the case of buying first then selling it's not a big deal if your existing equity can cover the required downpayment - you tell the bank that your plan is to use that existing equity to make the downpayment. You need to run some math in advance to make sure you're covered for property transfer tax and realtor commissions and then the bank will also be pretty conservative about what you can sell your place for. My bank told me they thought I'd be about $200k short for a downpayment when in reality I should be right around break even.

If your completion dates line up then it's all rainbows and unicorns. If they don't (you have to own 2 places at once) then you need a temporary bridge loan from the bank - I might need this in my case and it's a bit of a hassle but becoming more common nowadays with a hot market. The loan requires that you've got a firm offer to sell your place to someone and you have enough equity that the loan will be paid off when the sale of your place goes through.

Sell first and buy later is tricky - if you're shopping for something that's common like a 1-2 bedroom condo then it can work but I couldn't risk that - my options were pretty slim (detached house in East Van/Burnaby).

Sounds like whistler to me, where you pay x3 just to own a week of the year.

the 4 C's of success

crown, coke, cactus, club

Wow Jagmeet really went off the deep end.

^ I see what you did there

Are you sure it's not osama?

Acura604 should hire that guy as his realtor!

:pokerface::joy::lawl::lawl::lawl::lawl:

House in my parents hood just sold for “$430,000 over asking”

https://i.imgur.com/ucUvcMu.jpg

https://i.imgur.com/EWZliUh.jpg

At least that one has almost 1/2 an acre of land, not as egregious as what some of the tear downs sitting on a lot not much larger than the size of a bus stop are going for.

And over $1m over assessed - that's just nuts.

Where are people coming up with this kind of money?

Mom and dad, or the massive mortgages that people can qualify for. I don’t know why people get wound up about the “strict” stress test. The amount you can borrow compared to your income is absurd.

At least overpaying for that place you are actually getting somthing pretty substantial. A 7000 sq ft house on a half acre lot in a neighborhood where that is virtually non-existent.

My parents lot is 12,500 and Growing up I never went to a house that had a bigger property. This one is massive

yeah that area of fh has some pretty crazy houses... half acre is massive. most of fh is more typically like 6-8000sf lots.

To think that some people are content to basically spend their entire monthly earnings on mortgage payments. Don't get me wrong, I see the appeal of owning, but at the cost of being able to do nothing else with my life? Nah, thats "too much" ownership for me.

Very with you on that.
Can having more space and your own front door really bring more happiness than eating the best food, driving the car you want, taking vacations when/where you want, having savings for some comfort, etc?
I guess for some people it does, but sounds boring.

I think the stress test affects folks differently depending on the value of the home - in my case it reduced my borrowing power to the point where I actually laughed at how small my monthly payment was going to be. With interest rates being so low the gap between the test and reality is massive (it'd be about an 80% increase in my payments if it ever hit the stress test number of 5.25%). I do support the strict stress test as a way to slow down the market but I'm in a position where I wanted to borrow a lot more b/c the payments weren't an issue and I'd prefer to divert the funds to other uses. For me it was an annoyance as I can wanted to create more leverage for my money.

I suspect the lower income folks who are making their first foray into the market are the ones who need the test more than I would - spending an entire paycheque (or more) on a mortgage doesn't make a lot of sense.

^^^ would your payments be okay without the rental income downstairs? I think banks are pretty strict on rental suites now too.