For borrowers, your debt ratios or "ability to pay" will largely determine the amount of a loan or whether you may be approved for a mortgage.
For applicants requiring exceptions on debt ratios above the maximum guidelines, it has been tougher to obtain approvals as a direct result of last year's mortgage rules tightening, which imposed stricter debt ratio calculations (among other stricter changes). It is predicted that by years-end those calculations will get even more conservative.
On June 27, CMHC issued new guidelines for calculating debt ratios and for confirmation of income documents. These are guidelines for high ratio mortgage of 80.1% loan to value or higher but lenders have adopted these rules for conventional mortgages as well. Some of these new guidelines affecting how Financial Institutions will calculate your debt ratios or "ability to pay" effective on December 31, 2013 will restrict the way in which your income must be confirmed.
These restrictions will be imposed on:
Variable incomes such as bonuses on income, tips, seasonal employment and investment income
Rental income on investment properties
Unsecured credit lines & credit cards minimum payment calculations
The up-coming changes will make financing more difficult for clients who do not "fit into specific molds" that is why it is vital to have a Mortgage Planner who will work with you to meet your financing needs.