28 Apr

Writing a Subject Free Offer – Mortgage Tips


Posted by: Adam Sale

Writing a Subject Free Offer – Mortgage Tips

Subject free offers seem to be the new normal in Vancouver’s real-estate market. In regards to financing, here are some tips for purchasers writing a subject free offer:

  • Prior to writing the subject-free offer obtain the Property Disclosure Statement, MLS Listing, Strata Form B (if available) & Depreciation Report (if available) so your mortgage broker can confirm with the lenders they will finance the property.
  • Purchasers should have a down-payment of at least 20%, and preferably 25% of the purchase price. This amount of capital will provide access to the greatest number of lenders.
  • Purchasers wanting to use a down-payment which less than 20% of the purchase price are at the mercy of 3 mortgage insurance companies. If these 3 insurance companies decline the mortgage request, the banks will not approve the loan and the borrower is forced to find a private lender at EXTEMELY high interest rates (14%-20%), or risk losing their deposit, or legal action. When writing a subject-free offer on a property I always ask these clients,

“if you have to, can you come up with a 20% down-payment for this property? If you cannot come up with a 20% down-payment, making a subject-free offer is extremely risky”

  • Prior to viewing properties (or writing a subject free offer), purchasers should receive a complete mortgage analysis from their mortgage broker to discover their lending limits. Many banks will issue pre-approvals (which is essentialy an interest rate hold) based on a borrower’s self-directed application without verifying the necessary documents. A competent mortgage broker will request the required documents upfront to ensure all information is verified and the process moves smoothly.
  • If the property is priced at the purchaser’s upper lending limits, ensure the mortgage broker has received the MLS listing well in advance so they can add the necessary amounts to the application. The property’s MLS listing discloses condo fees, property taxes and sq/ft amounts which may help or hinder the mortgage request.

To learn more about how to write the most competitive offer, please contact me at 778-215-4121.


Adam Sale

8 Apr

Proposed New Stress-Test for Uninsured Mortgages – June 1st 2021.


Posted by: Adam Sale

OSFI Proposes New Stress-Test for Uninsured Mortgages

The new proposal for the qualifying rate for uninsured mortgages is the higher of 5.25%, or the mortgage contract rate +2%. This is an increase from the current stress-test of 4.79%.

Increasing the stress-test specifically on uninsured mortgages will affect homebuyers purchasing with a 20% down-payment by decreasing their lending limit. It is also expected to put negative pressure on housing prices, primarily on homes above $1-million.

In Vancouver, assuming a client is earning $100k annually, their lending limits would decrease from approximately $560k to $528k on a 30-yr mortgage.

OFSI is seeking input from interested stakeholders on this proposed qualifying rate by email to b.20@osfi-bsif.gc.ca before May 7, 2021.

OFSI will communicate final amendments to the qualifying rate for uninsured mortgages by May 24,2021 with a coming into force date of June 1, 2021.