"Deleverage" - it's the new buzz word in banking and financial circles. It seems to mean, what happens after interest rates rise and house prices drop when we can no longer afford to pay our bills. This has come on the heels of study which showed that average Canadians owe 11/2 times approx. what they earn. So... our banks are moving from the not so distant mode of offering borrowers more than they wanted or needed, to denying solid, loyal customers who don't fit in the new frame.
What this means in terms of today's real estate purchasers is that when you talk to lenders in financial institutions, be sure to get their commitments in writing. Do not accept a verbal preapproval - especially for bridge financing - when you are buying before selling. We have recently experienced some very stressful situations where the preapprovals were not what they seemed, and the bank didn't care. If a bank is not prepared to give you written preapproval spelling out the terms, move on to the one which will. The real problem is that the bank employee will receive their pay cheque whether or not you get your mortgage or bridge financing. The mortgage broker is the person who is rewarded financially for making it happen, and therefore has the incentive to work with you for what you need.
No one has the crystal ball and the market forecasts are all over the map. But this does not give the big banks license to ride roughshod over their customers and move the goalposts part way through the game. Be careful out there . If you have any doubts, call us. We are here to answer questions and keep you as risk-free as possible. Feel free to call us - we always want to keep you covered. At 2.34% with 5 year term, interest rates still look rosy. Take advantage while you can.
Your partners in real estate - Sheila and Michelle.