As we discussed on the Canadian Mortgage Hangout yesterday, it appears many lenders are making changes to the way they qualify Secured & Unsecured Revolving Credit. From my understanding at this time, there is no official government mandate to make changes acorss the board, each lender is making a decision for themselves. As I receive the information from the lenders, I will continue to update our blog.
First National Financial LP
First National *** Effective immediately - Here are the following guideline rule changes to both Secured & Unsecured Revolving Credit. First National includes the note that they will continue to work with brokers to find great mortgage solutions for our clients.
Unsecured Revolving Credit
"Effective immediately, the monthly payment for all revolving unsecured credit will be 3% of the outstanding balance. Interest only payments can no longer be used". Basically this means that regardless of the actual payment owing on any unsecured credit, First National will debt service the payment at 3% of the outstanding balance.
Secured Revolving Credit
"We will take 4.6% of the LIMIT on the LOC over a 12 month period, regardless of balance owing. Example would be on a $300k LOC, payment to use would be $1,150. We must also confirm that the LOC is secured against a property so we would need a LOC statement as confirmation".
Formula with the above example: $300,000 x .046 = $13,800 / 12 = $1,150
More to come on what this exactly means for you, but honestly, it has just gotten more difficult to qualify for a mortgage.