BIG BANK BETRAYAL? WELL QUALIFIED CANADIANS COULD BE OVERCONFIDENT IN GETTING MORTGAGE REFINANCING BACKED BY BANKS

TORONTO, Jan. 29, 2024 /CNW/ - After major interest rate hikes and inflation, there may be a major mortgage meltdown in the mail for many Canadians planning to simply refinance through their banks.

360Lending is anticipating a 'perfect storm' of higher interest rates, softening real estate values, and the government-imposed B-20 stress test, resulting in many homeowners being surprisingly unable to refinance their mortgages.

To make matters worse, many homeowners will be facing a significant increase with their mortgage payments when their mortgage matures, even without refinancing.

To showcase just how serious the situation is, 360Lending has shared the real profiles of five well-qualified Canadians who were surprisingly rejected for mortgage refinancing by their banks but were approved through a mortgage broker and alternative lending.

Homeowner # 1 

Profession:	Management role with a major educational institution
Salary:	$145K/year
Mortgage:	Mortgage with BMO $800K
	Mr. G works in a management role with an educational institution in Ontario. He lives in a $1.8M property in an affluent area near Mississauga. He has incurred about $100K in debt in the past few years and he was being financially prudent by refinancing his mortgage to pay off these debts before they become a bigger problem. He was quite surprised when he found out that even with his 700+ credit score and his respectable job/income he couldn't qualify with his bank. His broker had to include his partner's $100K/year income to qualify him with a subprime lender.

Homeowner # 2 

Profession:	Teacher full time + part time
Salary:	$75K/year
Mortgage:	Mortgage with TD, $500k
	Mrs. K is a full-time teacher, and she lives in a beautiful $800K property located in an affluent neighborhood in Hamilton. Her bank promised her that her collateral mortgage will make it easier for her to borrow money in the future. However, her refinancing application was declined when she wanted to consolidate her credit card debt. The collateral mortgage effectively blocked her from getting help from another financial institution. Her broker helped her obtain a private mortgage which improved her cash flow and her credit score improved to 700+ after a year. She had to move her 5.40% variable rate mortgage with a major bank to a fixed rate mortgage of 7.79% with a subprime lender due to the interest rate hikes despite working a part-time job on top of her full-time job to qualify.

Homeowner # 3

Profession:	Project Manager
Salary:	$75K/year + Administrator $55K/year combined income
Mortgage:	Mortgage with BMO $300K + alternative lender $180K
	Mr. and Mrs. Q are young professionals who fell in love with a unique property near Durham Ontario and bought it in 2022 with the intention to renovate it the next year. When they went to BMO to refinance in 2023, they were declined due to the interest rate hikes pushing them out of the bank's lending guidelines. While their affordability ratios fit within the B Banks' guidelines, they were also declined because B Banks generally do not lend on properties outside of major urban areas. They were only able to complete their renovations after their broker help them qualify with an alternative lender.

"The major banks have no solutions for tens of thousands of Canadians whose mortgage payments are going to skyrocket or need to refinance, this is a critical time for homeowners to understand their finances in detail and learn how the mortgage industry works outside of the Big 5 banks," said Ringo So, Mortgage Agent and Managing Partner of 360Lending.

Homeowner # 4

Profession:	Sales Executive
Salary:	$45K/year
Mortgage:	$1M Mortgage free property
	Mr. M owns a mortgage free property in Aurora that's valued at $1M, he's a young sales executive with a 700+ credit score and decent pay, but he couldn't qualify with the major banks for a $100,000 line of credit due to the sharp interest rate hikes. He ended up qualifying with a subprime lender (B Bank) at 10%.

Homeowner # 5

Profession:	Senior Vehicle Technician
Salary:	16 years $80K/year + Teacher 15 years $100K/year
Mortgage:	With Scotiabank $730K
	Mr. V and his wife bought their dream house worth $1M just outside of Mississauga in early 2021 with an adjustable-rate mortgage of 1.55%. As prime increased, his rate went up to 6.4% and his payment jumped from $1,000 bi-weekly to almost $1,900 bi-weekly. Even though he and his wife earn a total of $160,000k per year, having been in their respective fields for 15+ years each, their financial situation took a turn for the worse as they started missing their credit card and car payments and eventually their mortgage fell into arrears. They were able to avoid disaster only because their broker helped them obtain a second mortgage through a subprime lender.

"There are going to be thousands of Canadians going into their banks in the next few months to look for a solution to keep their payments affordable or to seek an approval for refinancing … many of them will be turned away, but there are mortgage brokers who can offer advice and solutions to these very real problems," added So. brokers have access to special rates that are better than the banks' posted rates. Brokers are incentivized to help their clients save money whereas banks only want to sell you more of their products by cross-selling and up-selling."

About 360Lending

With over 2,000 5-star reviews online (Trustpilot, Google, Facebook etc.), 360Lending is an award-winning Canadian mortgage brokerage that specializes in providing solutions for mortgage refinancing, home equity loans, and home equity lines of credit. Their team of mortgage professionals have over 40 years of experience in helping Canadian homeowners get out of debt, rebuild credit, and improve their overall financial situation. 360Lending is an advocate for improving financial literacy across Canada by providing the education homeowners need to make more informed decisions, and the tools to help them succeed in achieving their financial goals.

SOURCE 360Lending

Patrick McCaully, Pointman News Creation, [email protected]