A significant percentage of Canadian mortgages are coming up for renewal in 2024.

Tracy Head • November 17, 2023

A significant percentage of Canadian mortgages are coming up for renewal in 2024. Considering the low rates we’ve enjoyed for the last few years clients are in for a bit of shock with where mortgage rates are now.


Although the Bank of Canada held prime steady with the last rate announcement, we are starting to see fixed rates trend down which is a relief. A significant change has been rolled out with how lenders are qualifying clients who are doing switches

at renewal (no new funds added). With the implementation of the stress test in 2016 we had to start qualifying clients at their contract rate (the interest rate the lender was offering) plus two per cent, or the Bank of Canada Benchmark rate, whichever was higher. When mortgages that were in place prior to the new rules came up for renewal we could qualify them at the contract rate or the Benchmark rate, whichever was higher.


Mortgages put in place after 2016 have all been coming up for renewal for two years now and these clients have been disadvantaged by the stress test calculation for switches at renewal. Many lenders have now adopted the recent change to the policy and we are now able to qualify clients at their contract rate or the Benchmark rate, whichever is higher, without adding the two per cent buffer to the contract rate.


Several clients I chatted with prior to this change were essentially stuck with what their current lender offered them for their renewal because they did not qualify anywhere else when we used current rates plus the two percent calculation.

And another positive note is what we are seeing with the fixed rate mortgage products.


Traditionally I see lenders offering rate specials through November and December during the slightly slower winter months, then popping rates up a bit as we start the new year. This year seems no different. Over the last two weeks I have seen rate reductions almost every day.


As a broker, one of the things I do for my clients is watch what interest rates are doing. When I am working with clients who are purchasing a home or refinancing, I choose lenders that are willing to continue to reduce my clients’ interest rates up until (shortly before) their closing date if the lenders drop their posted rates.


What can this mean in dollars and sense?


Two years ago some of my favorite clients were upsizing and buy a new home in Kelowna. Their mortgage new mortgage was going to be $700,000. Three weeks before their closing date rates started to drop. Three times the lender reduced their rate so that at closing time they were .25 per cent lower than the contract they originally signed.


The lower rate meant a savings to them of $7900 over their five year term.


If you have a renewal coming up over the next four months, I’d suggest looking into your options before we move into the new year. You should be able to have an interest rate held for 120 days which will provide some stability should rates trend up again once we are into the new year.

Tracy Head

Mortgage Broker

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Buying a Strata Property

By Tracy Head • March 6, 2025
Read the Fine Print After a few recent escapades with condo purchases I think I’d like to talk a bit about doing your homework when purchasing a strata property. Strata properties can offer the convenience of shared maintenance costs, security, benefits like pools and workout rooms, and in some cases a more attractive price point. For people with busy schedules that don’t have the desire to spend time on yard work (or shoveling!) strata properties can be a great fit. Strata properties are usually managed by strata councils. There are legal requirements with respect to meetings, finances and insurance, record keeping, maintenance and upkeep, as well as bylaws and rules. Not all strata properties are created equal. People don’t realize the importance of taking the time to read through the strata documents when they are considering buying a strata property. From a financing perspective there are several pieces that lenders look for. Lenders and insurers (CMHC, Genworth, Canada Guaranty) will read through strata documents, particularly meeting minutes, financials, and depreciation reports. They are looking to see if the building(s) have been well maintained, and if there are adequate funds in the strata’s contingency reserve fund (CRF) to cover any upcoming projects or unexpected issues. They will look to see if the strata has planned and budgeted for ongoing maintenance and updates to ensure the buildings stay in marketable condition. Lenders look to see if there is a rental pool or if there are rental restrictions. They are looking to see if there are any age restrictions. So how does this affect you as a potential buyer? If buildings have not been properly maintained or have had significant structural issues, they are sometimes flagged by mortgage default insurers. This means that those insurers won’t cover new mortgages for people trying to build into the complexes until those issues have been rectified or remediated. If the building has been flagged, it can mean that you are unable to find mortgage financing to purchase a unit in that building. This can also mean increased strata fees to cover big repairs. This may also lead to special assessments. Special assessments are used by stratas to raise significant funds relatively quickly to deal with major expenses. Over the last year I’ve talked to clients that have had to deal with special assessments of $23,000 and $10,000 respectively. Neither of these clients were in the position to come up with the cash, so they are both on payment plans. In both situations this additional monthly payment has created financial distress. Increased strata fees and special assessments can happen in any strata complex, but if you are looking at purchasing a unit in a complex that has ongoing issues or minimal funds in the contingency reserve fund you need to think about what that may look like down the road for your finances. Having said that, just because a building has had issues in the past does not mean you should cross it off your list of potential purchases. Do your homework. Check to see if the strata has dealt with any outstanding issues, and if they have documentation to confirm that. We were recently able to obtain approval in a complex that the insurers had flagged. For over two years the building had been flagged due to maintenance issues. In this case any units that sold were sold to cash buyers as lenders wouldn’t touch the complex. Major work was done and an engineer’s report was ordered to confirm the damage had been dealt with. Both the lender and the insurer went through all of the documents and approved the financing because all issues had been dealt with and the strata has taken steps to rebuild their contingency fund and ensure necessary maintenance is planned for in the future. This felt a bit cautionary. The intent of this information is not to scare you off of purchasing a specific property, but rather to encourage you to do your homework and learn about the strata you are buying into. Your realtor will be able to help you find answers to your questions, and it is important to have your lawyer or notary review the strata documents before you move forward with your purchase. The spring market feels to be picking up. If you are looking to get into the housing market, a strata property might be the ideal fit!

A Fresh Perspective

By Tracy Head • February 24, 2025
Part of what we do as mortgage brokers is explore options for clients.  Recently I worked with two families whose financing had been declined by their banks as the numbers didn’t work. In both cases, the families had already sold their existing homes and written offers to purchase new homes. Both had done well on their sales and had significant equity to work with. They were shocked to learn they didn’t qualify for similar size mortgages. Sometimes a fresh perspective makes all the difference. When I reviewed the first application I took a look at what the outstanding debt. Since they bought their previous home they had purchased two vehicles and were carrying about $12,000.00 on an unsecured line of credit. The vehicle payments were $457 and $692 respectively. For context here, your mortgage borrowing power decreases by about $100,000 for every $475 you have in payments for consumer credit (loans, credit lines, credit cards, etc). Looking at this family’s situation, I suggested using some of the equity from the sale to pay off their truck loan and line of credit. This reduced their monthly payments by $1,052 ($360 towards the credit line plus $692 for the truck) and meant that the numbers work for them to move forward with their purchase. This was a small tweak but made all the difference. My preference is that people put their equity back into a new purchase as opposed to paying off consumer debt. However, this decision needs to be made carefully by the clients as they are the ones ultimately responsible for paying the bills each month. In some cases this is the only way to qualify for a new mortgage. The second family’s application involved a slightly different tweak. When I calculated the funds they had available for their down payment and closing costs, it looked like they had $100,000 available for their down payment. The purchase price on their new home was $549,000. We discussed increasing their down payment to $109,800 which is twenty per cent of the purchase price. They spoke to her parents, and the parents agreed to gift them $10,000 to make up the difference. What this meant for the clients was that we were able to get an approval with a thirty-year amortization. With the increase in amortization and slight reduction in the mortgage amount (additional down payment + no default insurance fee), they qualified for the new mortgage they needed. Again, my preference is to see clients stick with shorter amortizations whenever possible. This family has chosen to have one parent stay at home while the children are young, so the smaller mortgage payments are a good solution for the short term. We talked about options for increasing their payments once the children are in school and the dad is back to work. Each family and situation is different, and often we are able to look for creative options to help find the right mortgage. Sometimes a second set of eyes is all it takes.
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