The excellent news is it is possible to get a mortgage in Canada with bruised or poor credit. In Canada, we have two types of mortgages: conventional and high-risk.

A purchaser requires a high-risk mortgage when he or she has less than a 20 percent down payment. Lenders must insure the mortgage through one of the three high-risk mortgage insurers, which are Genworth, Canada Guarantee and CMHC. Unfortunately, to get a high-risk mortgage, a borrower must have good credit as this is a requirement of not only the banks and other various lenders but also of the insurance companies.

Therefore, if you wish to purchase a home with less than 20% down payment, you must have good credit.

A good credit score is anything over 680. As of July 1, 2020, CMHC changed its policy regarding credit scores and requires at least one applicant to have a score of over 680 to qualify for a high-risk mortgage with the minimum score being at least 600. All lenders will also have their own credit requirements for high-risk mortgages, which usually means the score must be well over 600.
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We can offer financing to those with bruised credit if they have a 20 percent down payment or more. With bruised credit, “B” lenders, also known as alternative lenders, can offer borrowers financing that is still competitive (usually 1-2% more than Prime lenders are offering).

For more information, feel free to call or write. 

Sarah A. Colucci
Mortgage Agent Lic. M14000929
Mortgage Edge Broker 10680
Direct: (647) 773-4849

Before you begin house hunting, it’s important to know what you can afford and how much mortgage you can get from a bank.

Getting pre-approved makes the home buying process much easier since you can view properties in your price range almost immediately with a better chance of successfully purchasing your dream home.

What’s involved in getting a pre-approval?
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During a pre-approval appointment, we will gather your personal information including address, date of birth and employment information. We will request to see your income documentation preliminarily to ensure we are using the correct amount in the application.

If you are self-employed or hourly, we will take extra steps to ensure we have used the most income to qualify you, which is usually a two-year average based upon your filed taxes or T4s.

Sometimes, we can use bank statements to show income for self-employed individuals. 

We will also collect other documentation that supports additional income such as child support, alimony, ODSP or the child tax credit. 

What makes a pre-approval different from a pre-qualification is we underwrite your application upfront to guarantee we have offered the most mortgage you will receive. We also have an interest rate held for you for up to 120 days which allows you to shop for a home knowing you will still receive a great rate despite rate fluctuations.

To get started on a mortgage pre-approval today, apply here.
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Sarah A. Colucci
Mortgage Agent, Lic. M14000929
Mortgage Edge, Broker 10680 
Direct: (647) 773-4849

If you get mortgage financing with a prime lender, usually there will not be a broker fee involved. A prime lender often approves only those borrowers who have good credit and enough income to service the requested loan amount.  Examples of prime lenders are major banks, credit unions and monoline lenders. 

Your broker may charge a broker fee if you require an alternative loan or private loan. These types of lenders service borrower who either have bruised credit or a unique income situation or don’t fit the criteria of prime lenders. Unfortunately, there isn’t a standard fee that brokers charge with alternative and private loans since it depends on each file.

Why Is There A Broker Fee Payable For Alternative and Private Loans?

Not all brokers will charge a fee on alternative loans. However, in most cases, alternative and private lenders do not compensate brokers for the file they originated. Therefore, the fee becomes payable by the borrower.

If you have questions about broker fees, please call or write. 

Sarah A. Colucci
Mortgage Agent, Lic. M14000929
Mortgage Edge, Broker 10680 
Direct: (647) 773-4849

Evan Siddall of Canada Mortgage and Housing Corporation recently emphasized that properties across Canada will depreciate up to 20 percent by the end of 2021.

This is because Canada’s unemployment level is likely to remain dramatically elevated, which will affect property prices since it will force more people to put up the for sale sign.

Real estate value is determined by supply and demand. Therefore, a higher rate of unemployment and insolvency means more properties for sale and fewer people able to buy them. Prices will automatically be driven down. 

Depreciation is closely related to refinancing and something to monitor. How much money you can borrow from a bank or other financial institution depends on property value.

Most mortgage lenders will currently offer 80 percent of your property’s value in financing, however, this may be scaled back to 75 percent to mitigate risk related insolvencies and declining property values.

If you happen to have unsecured debt and have been contemplating a debt consolidation or refinancing your mortgage, consider what it would mean if your property suddenly lost 20 percent of its value.

Could you refinance based on what I just outlined?

If your property is currently worth $500,000 and you have a $350,000 mortgage but you need to access $50,000 for debt consolidation or renovations, for example, could you still accomplish this if your property suddenly became valued at only $400,000?

The answer is no.

If you can't refinance to pay high-interest debt such as credit cards or personal loans, you will have no choice but to keep making interest-only payments until your property value increases again.

Ultimately, the point of refinancing is to save money and spare your credit rating.

Credit cards bear significantly higher interest, which get compounded daily and become expensive, if not impossible to maintain.

Many people who get stuck in credit card debt traps can impair their credit score or sink into default.

Therefore, if you can refinance and it makes sense for you to do so, it would be worth your while to take advantage of low interest rates and stable property prices.

​We could see an unfamiliar environment in the next six months that may seriously inhibit your ability to do so. ​

Sarah A. Colucci
Mortgage Agent, Lic. M14000929 
Mortgage Edge, Broker 10680 
Direct: (647) 773-4849

It’s imperative that you protect your credit rating at all costs. 

Despite what is happening today, it’s crucial you take appropriate steps to maintain a good credit score during this uncertain time. Credit is your financial life line. Personal loans, car loans, mortgages and credit cards all depend on having good credit, so it’s critical you protect your score. 

Mortgage Deferrals 

Many mortgage borrowers have deferred their mortgage payments up to six months to help with the cost of living and taking a pay cut if temporarily laid off.

While deferring your mortgage is a mutual agreement between you and your lender, mistakes can happen in the reporting methods. Sometimes, a deferred payment will get reported as a missed or late payment and can negatively affect your score.

With any deferral, it’s critical that you get a written copy of the approved deferral and your new mortgage terms (which include a new amortization summary reflecting interest paid on deferred payments). Your lender should either email or mail those forms to you, so you can keep them for your records. 

If there is a derogatory remark on your credit report regarding your mortgage payments at a later date, you can use the deferral agreement to have your lender OR Equifax and TransUnion make the changes immediately. 

Minimum Payments

If you are unemployed at the moment, you may think you don’t have to make your minimum credit card payments because of the current situations. Unfortunately, unless your lender has specifically stated you do not have to make credit card payments, you will still need to continue to protect your score. 

By law, you have 30 days after the minimum payment due date to put your account in good standing before they report it to the two credit reporting agencies. Late or missed credit card payments can have a devastating effect on credit and can create challenges when trying to get further loans. 

Debt Consolidation

If you are currently employed but feeling very uncertain about the current situation and the debts you have, consider a debt consolidation. You can merge your unsecured debt into your mortgage loan to create one very low and affordable monthly payment with a substantially lower interest rate.  


Do you have questions?

Call or write. 


Sarah A. Colucci
Mortgage Agent Lic. M14000929 
Mortgage Edge, Lic. 10680 
Direct (647) 773-4849
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Borrowers often wonder why lenders require an appraisal when they are refinancing or if there is a way to skip the appraisal altogether.

An appraisal is a property valuation that considers similar properties that have sold in the last sixty to one hundred and twenty days. Depending on the final appraised value, a refinance application will either get approved or declined. This is because to refinance a property, besides meeting income requirements, a mortgage loan must also not exceed 80 percent of the property’s value. Therefore, ‘appraised value’ is critical in the re-mortgaging process.

Fortunately, some lenders do not require appraisals should an AVM support the property’s value. AVM stands for the ‘Automated Valuation Model.’

AVM is a computer program that can provide market analysis, and property value estimates. If the AVM can support a property’s value, lenders will not require a physical appraisal.

Appraisals can cost anywhere from $250 to $600 to complete, whereas an AVM is usually $99 and gets subtracted from the net mortgage advance amount.

Find out if your property can qualify using an AVM today!

Sarah A. Colucci
Mortgage Agent
Mortgage Edge, Broker 10680
Direct: (647) 773-4849

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As I mentioned in my previous blog posts about Covid-19 and credit, Canadian banks would likely start tightening up secured line of credit products to avoid financial risks like defaults and insolvencies.

Banks can accomplish this in three ways. One, they can arbitrarily reduce available credit limits. Two, they can disallow the ability to use a line of credit for certain objectives such as providing a down payment on another property, for example; or three, they can close them altogether.

Ultimately, a bank's decision to alter a person's credit facility on a home line of credit product will depend on factors such as repayment history in the last three to six months, and whether a person used the deferral option due to unemployment. 

The Federal Government's assistance program called CERB, which stands for Canada Emergency Response Benefit, is temporarily helping Canadians make their bill payments. Additionally, many have also used mortgage deferral options for up to six months to help stay afloat without a salary or wage. 

In light of the foregoing and also considering the CERB  and deferrals are coming to an end banks must prepare for the financials risks that may present themselves if borrowers start drawing from home lines in order to supplement income. 

If it becomes apparent that lines of credit are used as income replacement, then we will witness banks take restrictive measures immediately. 

Home Equity Lines of Credit have the capability of expanding risk for banks. After all, when people have limited income during recessions and times of higher unemployment rates, they turn to their home lines because they are inexpensive due to a low interest-only payment, and are easily accessible.

Unfortunately, if lockdowns continue or the economy has a rough restart with continued unemployment, then, of course, this will become reality. 

Scotiabank, for example, will no longer allow borrowers to use home equity lines of credit as a form of a down payment on another property. And although other big banks have not employed a similar policy, it wouldn't be unusual if they did. 

A Home Line of Credit is a collateral mortgage which is different from a conventional mortgage because it allows the bank to change its terms. 

Do you have mortgage questions?
Feel free to call or write. 

Sarah A. Colucci
Mortgage Agent, Lic. M14000929 
Mortgage Edge, Broker 10680
Direct: (647) 773-4849
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If you’ve received your mortgage renewal agreement and your mortgage is up for renewal soon, you may be wondering whether you should lock into a fixed rate or choose a variable rate mortgage this time around. 

Historically, the variable rate mortgage has always been cheaper over the long run despite the economy going through periods of volatility and rates increasing and decreasing. Overall, however, the savings achieved through having a variable rate have always been greater than the savings offered through fixed-rate mortgages.   

Nevertheless, each person’s situation is different, and while one person may be able to withstand times of higher interest rates, another person may not. Therefore, choosing a variable rate mortgage requires careful consideration. 

A variable rate is usually set at either Prime Rate, Prime Rate Plus an Interest Rate (Prime Rate plus a premium) or Prime Rate less an Interest Rate (Prime less a discount). 

Prime Rate itself is influenced by the Bank of Canada’s overnight lending rate, which is further determined by economic conditions and the Government’s attempt to maintain healthy inflation.  In November 2000, the Bank of Canada introduced a system of eight fixed dates each year on which it would announce whether or not it would change the policy interest rate, otherwise known as the overnight lending rate. 

Therefore,  it’s important to realize there’s an opportunity for the Prime Rate to fluctuate up to eight times a year, and if you are someone who cannot afford interest spikes, the variable rate may not be for you. 

Fixed Rates

A fixed-rate on the other hand simply means the rate will stay the same for your entire mortgage term. So for example, if you choose a five-year closed mortgage, this will mean your payments will be determined by the same rate for five years, and there will not be any fluctuation to your payment. 

Fixed-rate mortgages are obviously beneficial because someone can budget their payments each month and not have to deal with the stress of following the market or the Bank of Canada’s overnight lending rate meetings. 

On the flip side, however, a person who chooses a fixed rate will miss out on an opportunity to pay a lower interest rate and may be faced with a large penalty should they decide to exit their mortgage early. 




Penalties. 

There will always be a penalty to exit a closed mortgage before the contract expires, which is why it’s important to consider how penalties get calculated for both fixed and variable rate mortgages. 

A variable rate mortgage will always be just three-months of interest -  it doesn’t matter where you are in the term, the calculation will be the same. 

Fixed-rate mortgages are calculated differently and often, more punitively. A fixed-rate mortgage is calculated using an Interest-Rate-Differential (IRD) formula. The penalty is either three months’ worth of interest OR the IRD, whichever is greater.

For more information, please do not hesitate to call or write. 

Sarah A. Colucci
Mortgage Agent Lic. M14000929 
Mortgage Edge, Broker 10680 
Direct: (647) 773-4849
Email: sarah.colucci@mortgageedge.ca 

In my previous article, I emphasized that changes to mortgage guidelines and prudent risk measures would start being implemented by mortgage lenders. 

The last point I made touched on secured lines of credit and some measures mortgage companies would likely start implementing to mitigate credit and financial risk. It is very possible, if the economic lockdown continues to degrade the economy, we will see lines of credit arbitrarily closed or in the alternative, available credit limits will be drastically reduced with or without notice to borrowers. 

The reason:

There is very sobering problem with liquidity constraints in the market right now which means there are not many funds circulating,  which also means mortgage funds will come at a greater cost to consumers. This is why the interest rates have risen upwards of 70 basis points in the last three weeks despite the retreat by most investors to the bond market (that normally pushes rates down). 

Clearly, there is too much risk to investors considering the volatility and skyrocketing unemployment rates which is also why private lenders are not lending nearly as much as they used to or even at all. 

Despite the many well-versed economists declaring their predictions and forecasts, the truth of the matter is this is an unprecedented time with no end date determined and not one person has a crystal ball. With each passing business day, there are more lay-offs, more closures of small businesses and much more uncertainty regarding whether unemployment will become permanent or long-lasting even after COVID-19 has been resolved.

While a lender may agree to lend a mortgage at 80 percent of the property's value today, it is essential for them to realize (which they certainly do) that in just two to three weeks from now the same property's value can plummet by ten percent or more. It's not surprising, then, to consider a lender may stop lending at this loan to value and scale back on approved mortgage limit.

Now, regarding lines of credit. Many homeowners have a mortgage product such as a Home Equity Line of Credit registered against their property. I have written about some benefits and disadvantages of home lines before, however, not in this context. I'd like to forewarn borrowers about what we could see happen very soon.

Although having a line of credit with available cash to access in a crisis seems re-assuring, the truth of the matter is any lender can reduce or close this account without any reason or rationale should they decide to. When your mortgage is registered as a collateral mortgage, it is not a conventional mortgage, it is based on a promissory note which allows the lender to have full-reign on the entire credit facility. 

This authority allows the lender to exercise all risk mitigation strategies it is entitled to employ, which it will without notice. 

Therefore, the question is: if you are someone who has no savings, no cash for a rainy day and are relying on your secured line of credit to get you through a depression (even if temporary), is this a safe position to take? 

This is a critical question to ponder and if need be, act on. 


Sarah A. Colucci
Mortgage Agent
Mortgage Edge, Broker 10680 
Direct: (647) 773-4849
Email: sarah.colucci@coluccimortgage.com 

There have been many changes to mortgage lending over the past couple of weeks that will likely continue to change as long as we are within the COVID-19 crisis.

Many mortgage lenders are facing liquidity constraints and borrowers in general are posing more risk to lenders because of lay-offs and the likelihood of lay-offs in the near future. 

As a result of the foregoing, many lenders are tightening their guidelines which will make mortgage borrowing more difficult from here on out and until we move past the pandemic. The changes discussed above are also making mortgage money more expensive and as we have noted in the last couple weeks, some lenders have increased fixed rates by upwards of 70 basis points. 

Although the Bank of Canada's overnight lending rate has gone down drastically, which directly impacts Prime Rate, most lenders have reduced a discount off the Prime Rate or have added interest. 

When it comes to mortgage changes, here are some examples we may see in the near future. Keep in mind some have already been implemented:

Down payment for investment properties will likely need to come from personal savings only. Currently, most lenders allow a borrowed down payment which is secured against an existing property, however, with the tightening of liquidity and overall risk, we can expect lenders to disallow this form of down payment going forward.  

Temporary lay-offs will likely disqualify borrowers from obtaining mortgage financing even if previously approved. Mortgage applications that have already been approved may be declined if borrowers have been temporarily laid off. New applications will be declined if a person has been temporarily laid off.

Personal savings may play a larger role in qualifying for mortgage financing. As long as applicants meet the standard qualifying criteria such as income and credit requirements, for example, a mortgage loan is usually approved. With the liquidity constraints and substantially increased risk borrowers are now posing, however; lenders may require borrowers to have additional "healthy" savings beyond their down payment or if they are refinancing. 

Rates will be held for a shorter period of time. Once an approval is issued by a lender, a rate will be honoured either until the closing date or for a couple of months regardless of whether a borrower signs and accepts the approval right away. With the changes and tightening of mortgage lending in place, rates will likely not be held for an extended period of time if an approval is not signed and accepted by borrowers within 7-10 business days from the date of approval. 

Lines of credit may be closed. If the situation becomes dire, we may start to experience secured line of credit facilities closed or reduced. This means lenders may arbitrarily close down credit products to minimize overall risk.

What about property value?

Some economists have postulated that depending on how long the Covid pandemic goes on, property prices may decrease as much as 30 per cent. In Toronto, the damage would be less than in the suburbs.

This is likely due to the higher unemployment rate and lay-offs which may become permanent. It will all depend on how
long the economy is shut down and consumer sentiment once this is over. 

Do you have questions about your mortgage?
Feel free to call or write. 

Sarah A. Colucci
Mortgage Agent 
Mortgage Edge, Broker 10680 
Direct: (647) 773-4849
Email: sarah [dot] colucci [at symbol] mortgageedge [dot] com