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Revolving Credit Changes by OSFI 2023


Title: Understanding OSFI's Revolving Credit Changes in 2023 


In the world of finance and banking, regulatory bodies play a crucial role in ensuring the stability and integrity of the financial system. In Canada, the Office of the Superintendent of Financial Institutions (OSFI) is a key regulator responsible for supervising and regulating financial institutions. In 2023, OSFI introduced significant changes to revolving credit, which has far-reaching implications for both consumers and financial institutions. In this blog post, we'll delve into these changes and their potential impact. 


What is Revolving Credit? 


Before we dive into OSFI's changes, let's briefly understand what revolving credit is. Revolving credit is a type of credit arrangement where a lender extends a maximum credit limit to a borrower. Borrowers can access and use these funds at their discretion, up to the established credit limit. Credit cards and lines of credit are common examples of revolving credit. Unlike installment loans, which have fixed monthly payments and a set term, revolving credit allows borrowers to carry a balance and make variable monthly payments based on their usage. 



OSFI's Changes to Revolving Credit

  • Minimum Payment Requirements: OSFI has introduced stricter minimum payment requirements for revolving credit accounts. These changes are aimed at ensuring that borrowers make substantial progress in paying down their outstanding balances. This could lead to higher minimum monthly payments for credit card holders and individuals with lines of credit.  They will be reducing it from 80% to 65% for any HELOC/mortgage products that are re-advanceable.
  • Affordability Assessments: Financial institutions will now be required to conduct more rigorous affordability assessments when extending revolving credit to consumers. Lenders must assess a borrower's ability to repay not only the current balance but also the potential future balance based on the credit limit. This change is designed to prevent borrowers from becoming trapped in a cycle of debt.
  • Enhanced Disclosure: OSFI has mandated enhanced disclosure practices to improve transparency for consumers. Lenders will be required to provide clearer information about interest rates, fees, and the potential costs of carrying a balance on revolving credit accounts. This empowers consumers to make more informed financial decisions.
  • Credit Limit Reviews: Financial institutions will be required to review and assess a borrower's credit limit on an ongoing basis. This is to ensure that the credit limit remains appropriate based on the borrower's financial circumstances. Lenders may need to adjust credit limits if a borrower's financial situation changes significantly.

Impact on Consumers


OSFI's changes to revolving credit are primarily aimed at protecting consumers from falling into excessive debt and improving financial transparency. Here's how these changes may impact consumers:


  • Higher Minimum Payments: Borrowers may see an increase in their minimum monthly payments, making it important to budget more effectively to manage their revolving credit accounts.
  • Stricter Eligibility Criteria: Obtaining a credit card or a line of credit may become more challenging as financial institutions adopt stricter affordability assessments.
  • Improved Transparency: Consumers will benefit from clearer information about the cost of revolving credit, helping them make more informed borrowing decisions.
  • Reduced Risk of Debt Spiral: By implementing credit limit reviews and affordability assessments, OSFI aims to reduce the risk of consumers falling into a cycle of debt that can be difficult to escape.

Impact on Financial Institutions


Financial institutions, too, will experience significant changes due to OSFI's new regulations:


  • Compliance Costs: Financial institutions will need to invest in technology and processes to ensure compliance with the new regulations. This may result in increased operational costs.
  • Revised Underwriting Practices: Lenders will need to adapt their underwriting practices to meet the new affordability assessment requirements, potentially leading to changes in how they evaluate and approve credit applications.
  • Ongoing Monitoring: Regular credit limit reviews and monitoring of borrower financial situations will require additional resources and infrastructure.



OSFI's changes to revolving credit in 2023 mark a significant shift in how financial institutions offer and manage revolving credit accounts. While these changes are primarily aimed at protecting consumers and ensuring responsible lending practices, they will also have a profound impact on the banking industry. As these regulations are implemented and refined, it is essential for both consumers and financial institutions to stay informed and adapt to the evolving landscape of revolving credit in Canada.  If you have a HELOC attached to your mortgage, you may want to contact us to explore the effects of these changes.  


Tracy Bennett at 12:40 PM
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How a Mortgage Broker Can Help You with Refinancing

Elderly couple smiling and looking at each other while in a consultation in their home.


Let's start by understanding what mortgage refinancing means. 


Mortgage refinancing is the process of replacing an existing mortgage with a new one. This is often done with the goal of securing better terms, such as lower interest rates, reduced monthly payments, or changing the loan's duration or pulling out cash to payout debts or renovate or to buy another property. Refinancing can also involve changing from an adjustable-rate mortgage (ARM) to a fixed-rate mortgage, or vice versa.  


When you refinance a mortgage, it's similar to taking out a new loan to pay off your old one. This can be a strategic move to improve your financial situation or reduce debt. For example, if interest rates have dropped since you initially got your mortgage, refinancing to a lower rate could save you money over the life of the loan. Additionally, if your credit score has improved since you first obtained the loan, you might qualify for a better rate through refinancing. 


However, refinancing is not without its costs. There are fees associated with the process, including appraisal fees, and possibly title or legal fees. Therefore, it's essential to consider these costs against the potential savings from a lower interest rate or other benefits.  These costs can be rolled into the new mortgage.  

This is where a mortgage broker becomes your helpful guide in navigating the muddy waters of refinancing.  


Their expertise  and deep knowledge of the mortgage lending and real estate industries can be your best asset in securing a great deal and ensuring your financial well-being.   


In today’s blog post, we will explore how a mortgage broker can help you with refinancing your loan.   


If you’re interested in further exploring refinancing as an option, be sure to reach out to our team of expert mortgage brokers and we will help you navigate this process seamlessly. This does not have to be a scary or overwhelming chapter of your life. Trust our experience, you’re in good hands.



The Role of Mortgage Brokers

A mortgage broker is a matchmaker between you and the right mortgage. They're experts who help you find and understand different types of mortgage options! Think of them as helpful guides who know the ins and outs of the mortgage lending industry and can help you throughout this process.  


It's important to know that mortgage brokers are different from lenders. Lenders are the ones who lend the money. Brokers, on the other hand, are individuals that connect you with lenders and work to find the loan that suits you best. So, while lenders offer mortgages, brokers help you navigate the loan options and save you money.  We are volume centers and get discounts on rates based on volume and efficiency.  With our time in the industry, we get better rates than the new or less experienced broker.   


Using a mortgage broker for refinancing can be beneficial. First, they are privy to a wealth of information and loan options. Instead of just one choice, you get access to many different options. Second, brokers create loans that fit your lifestyle and financial wealth plan. They listen to what you need and find a loan that matches that. Lastly, they're great at talking about money. They can talk to the lenders for you, making sure you get the best deal possible based on your requirements. 



How Mortgage Brokers Assist with Refinancing  


Smiling female mortgage broker holding a small paper house in a bright room.


Let's dive into how mortgage brokers make refinancing a loan easier, step by step:  


  • They start by taking a good look at your financial situation and what you want to achieve. By sitting down and planning with them, they can understand your financial goals.  

  • Once they know what your goals are, they seek out the best loan options. They do research, comparing different loans and interest rates, and then they show you the one that meets your needs. It's helpful having someone knowledgeable to do all the tedious work for you.   

  • Paperwork can be overwhelming, but brokers take care of that for you. They guide you through all the forms and documents you need to fill out. This is a big relief, especially for individuals with lots of tasks on the go. Online and client portal make it easy to assist with collection and retention of documents.  

  • Communication is key in refinancing, and brokers are great at it. They talk to the lender on your behalf, making sure everything is clear and that your questions are answered.   

  • Sometimes, there are bumps in the road, like unexpected challenges or problems. Brokers are like skilled drivers who navigate those bumps. They help you navigate obstacles that might come up during the refinancing journey.  



Benefits of Collaborating with a Mortgage Broker  

Let's take a closer look at the benefits of collaborating with a mortgage broker for your refinancing:  


  • You save time and energy. Instead of hunting for loans on your own, the broker does the legwork. They're like the search engine for the best loan options, so you don't have to spend hours comparing.  

  • Brokers are loan detectives. They have a knack for finding the top deals out there. Their knowledge helps you snag the loan that fits your financial needs perfectly, saving you from choosing the wrong one.  

  • Imagine having access to special offers that you wouldn't find otherwise. Brokers have connections and can often secure exclusive deals and lower interest rates.   

  • Money matters can be stressful, but working with a mortgage broker is similar to having a financial guide. They know the road, they know the obstacles, and they help you steer clear of trouble. You get to breathe easier, knowing you have an expert on your side.  


There are some myths about mortgage brokers, and it's time to clear them up:  


Myth 1: "Brokers are just out to make money." The truth is brokers are motivated to find you the best loan because their success depends on your satisfaction. If you're happy, they succeed too.  


Myth 2: "Brokers have limited loan options." Actually, brokers have a wide range of lenders and loans to choose from. They don't just stick to one source – they explore multiple avenues to find what suits you.  We currently have about 58 lenders to select financing through.  


Myth 3: "Brokers only work with big loans." Not true! Brokers assist with loans of all sizes, whether you're refinancing a small home or a larger property. They're there to help, no matter what the loan amount.  



Choosing the Right Mortgage Broker  

Choosing the right mortgage broker is vital to the success of your loan.


Couple smiling and embracing during consultation in their home.


Here are some smart ways to make sure you're teaming up with a reliable and skilled broker:  

  • Research Credentials and Reviews: Investigate their background and see if they're licensed and trained. Also, read reviews from other people who have worked with them. If they have a good track record, it's a good sign they're trustworthy.  You are reading this blog, so contact us, we have loads of experience in refinancing!  

  • Interview Potential Brokers: Before moving ahead with the process, have a talk with potential brokers. Ask them about their experience and how they can help with your refinancing goals. You want to make sure they're a good fit for your financial team. I highly suggest someone that has over 15 years of experience.  

  • Ask for Referrals from Trusted Sources: Think of this like asking friends for restaurant recommendations. If someone you trust had a positive experience with a broker, it's likely they're a good choice. Getting referrals can point you in the right direction.  


Let’s talk about the warning signs that a broker might not be the best fit for you:  


  • Pressure to Sign Quickly: If a broker is rushing you to sign on the dotted line without giving you time to think, it's a red flag. A good broker will give you space to make a decision that's right for you.  

  • Lack of Transparency: Just like in any relationship, trust is crucial. If a broker isn't clear about fees, rates, or any part of the process, it's a sign they might not have your best interests at heart.  

  • Limited Communication: Communication is key. If a broker isn't responding to your questions or taking a long time to get back to you, it could be a sign that they're not as invested in helping you.  



Final Thoughts  

Whether you are securing a mortgage for the first time or looking to refinance a mortgage, this process is often confusing and time-consuming. We hope that today’s blog post on how a mortgage broker can help with your refinance has helped clear some confusion and given you the confidence to make informed choices for your financial future.  


If you’re interested in further exploring refinancing as an option, be sure to reach out  to our team of expert mortgage brokers and we will help you navigate this process seamlessly. This does not have to be a scary or overwhelming chapter of your life. Trust us, you’re in good hands.




Tracy Bennett at 10:00 AM
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September Newsletter

Hello September!


This month we are covering what you need to know about condition-free offers, plus since the kids are headed back to school, now is a great time to teach them about money.


Market Beware: Condition-Free Offers


When it comes to purchasing a home, most offers include “conditions” (or “subjects” if you are in the provinces of British Columbia or Manitoba), which are requirements or criteria to be met before the sale can be finalized and the property is transferred.


Some of the most common conditions include:

  • Financing approval
  • Home inspection
  • Fire/home insurance protection
  • Strata document review if applicable

The purpose of these conditions is to protect the buyer from making a poor investment and ensure that there are no hidden surprises when it comes to financing, insurance, or the state of the property.


These conditions are written up in the purchase offer with a date of removal. This is agreed to by the seller before the sale is finalized. Assuming the conditions are lifted by the date of removal, the sale can go through. If the conditions are not lifted (perhaps financing falls through or something is revealed during the home inspection), the buyer can waive the offer and the purchase becomes void.


In some cases, homebuyers choose to approach an offer without conditions. Below we have outlined the impact of what this means for buyers and sellers to help you better understand the risks and outcomes:


Pros of Condition-free Offers


  • Buyers: The main benefit of a condition-free offer for a buyer is the ability to “beat the competition” in a heated market. However, it is not without risks.
  • Sellers: Typically, a condition-free offer will include a competitive price, willingness to work with the dates the seller prefers, and evidence that the buyer has already done as much research as possible. If time is sensitive for the seller because they are trying to purchase another home or want to move as soon as possible, they may also choose your offer over conditions offers to expedite the process.

Cons of Condition-free Offers


  • Buyers: As a buyer submitting a condition-free offer, you are assuming a great deal of risk in several areas including financing, inspection, and insurance:
  • Financing: While buyers may feel that they have a pre-approval and so they don’t require a condition to finance, it is important to recognize that a pre-approval is not a guarantee of financing. If you are submitting a condition-free purchase based on a pre-approval, buyer beware. The financing is subject to the lender approving the property and the sale; from the price and location to type of property or other variables the lender deems important. By submitting a condition-free offer without a financing guarantee (or an inspection, title check, etc.), there is a risk that the deal can fall through. Even when you do not include conditions on the offer, you still are required to finance your purchase. In addition, as deals are submitted typically with a deposit, there is a risk that if the condition-free offer falls through the buyer will lose their deposit. This amount can vary in the thousands and is typically a percentage of the purchase price or down payment.
  • Inspection & Insurance: If a buyer is also opting to skip the home inspection and home insurance protection conditions to have the offer accepted, then they assume huge risk as they do not know what they are getting and whether or not the property is up to code for insurance.
  • Due Diligence: With condition-free offers, there is no opportunity for due diligence after the offer has been made. This requires the buyer to do all their research before their initial bid. Because it is firm and binding, a buyer who decides to back out will likely be met with serious legal ramifications. Submitting an offer without conditions is not due diligence and it is at the buyer’s behest.
  • For Sellers: When it comes to the individual selling the property, there is less risk with condition-free offers but not zero. While the benefit is essentially there is no wait to accept the offer on the seller’s side, they do not know for sure if financing will come through.

Financing Around Condition-free Offers


When submitting a condition-free offer, it is essentially up to the buyer to do as much due diligence as possible before submitting. They will need to identify what the lender is looking for to make sure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a condition-free offer should do their very best to secure financing beforehand.


Contractual Obligations


Be mindful when it comes to purchasing offers versus purchase agreements. While your purchase offer is a written proposal to purchase, the purchase agreement is a full contract between the buyer and seller. The purchase offer acts as a letter of intent, setting the terms you propose to buy the home. If financing falls through, for example, then the contract is breached and this is where the buyer may lose the deposit.


It is also important to be aware of a breach of contract in the event that a seller chooses to take action. For example, if you submit a condition-free offer of $500,000 and cannot secure financing for that offer and the seller turns around and is only able to get a $400,000 deal with another buyer, they could potentially sue the initial buyer for the difference due to breach of contract.


Preparing a Condition-free Offer


If you have decided to go ahead with a condition-free offer, regardless of the risks, there are some things you can do to mitigate potential issues, including:

  • Get Pre-Approved: Again, this is not a guarantee of financing when you do make an offer, but it can help you determine whether you would be approved or not.
  • Financing Review: Identify what the lender is looking for to make sure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a condition-free offer should do their very best to secure financing beforehand.
  • Do Your Due Diligence: Look into the property and determine if there have been major renovations or a history of damage. This could come in the form of a Property Disclosure Statement. While this statement cannot substitute a proper inspection, it can help identify potential issues or areas of concern. If possible, conduct an inspection before submitting your bid/offer.
  • Get Legal Advice: This can help you determine your potential risk and ramifications of the offer should it be accepted, or otherwise.
  • Title Review: Be sure to review the title of the property.
  • Insurance: Confirm that you are able to purchase insurance for the home. Keep in mind, an inspection may be required for this but in some cases, you can substitute for a depreciation report if it is recent.
  • Strata Documents (if applicable): Thoroughly review strata meeting minutes and any related documents to determine areas of concern.

While there are things that can be done to help with condition-free offers, it is still risky. Ultimately submitting an offer with conditions gives you the time and ability to gather information on the above, as well as access to the property or home for inspections.


If you are intent on submitting a condition-free offer, be sure to discuss it with your real estate agent as they can determine if a condition-free offer is necessary, or if perhaps a short closing window would suffice to seal the deal. A good realtor will keep you informed of potential interest and other bids during the process as well. Their goal should be to maximize your opportunity and minimize your risk. In addition, before making any offers, be sure to contact me to discuss your mortgage and financing so you can make the best decision.



Back to School: Teaching Kids About Money


Financial independence is a critical skill for future success that your children will not learn anywhere else. Not only does financial literacy help your children have more success in life, but it allows them to move out sooner and it avoids delaying your retirement with additional expenses to support them.


So, how do you teach your children about money?


  • Review Your Attitude Towards Money: The first and most important thing is to examine your own attitude towards money. Are you a penny pincher? Frivolous spender? Do you buy on impulse, or take a long time to make a purchase? How much debt do you have? Your financial habits will shape your children. To ensure that you are setting them up for their best financial future, parents need to consider what messages they are sending with their own money habits.
  • Give Your Children an Allowance: Providing an allowance to your children (especially one in exchange for chores) is an age-old way of teaching your kids about money. A good guideline is $1.00 per year of your child’s age. For a 10-year-old, this would be $10 per week.
  • Teach Your Child to Save: If you are giving your child $10 per week in allowance for chores, encourage them to put even just $1 per week into a piggy bank. In six months, show them how much money they have saved and talk to them about why it is important, and what they can do with that larger amount now.
  • Encourage Kids to Think Before They Buy: While it’s hard to get a 10-year-old excited about an RRSP, there are other ways to help them plan ahead. One is to encourage them to think about their purchases before they commit. They saw a toy on TV and they have to have it - teach them about how advertisements are designed to make you want something. Ask them to wait a week. Do they still want it?
  • Involve Your Children in the Family Finances: It is more valuable than you might think to let your kids see and hear you discuss financial planning; let them be part of opening and paying bills or planning vacations. Explain why and how much you pay for certain things and discuss affordable choices. This helps them be part of the conversation and will work to instill a sense of financial responsibility as they grow up.

Remember, you are the best example to your children about money. Don’t be afraid to share the ups and downs with them. Be patient with your kids, but don’t give up!


The best thing you can do as a parent is to promote financial security and independence.


© Copyright 2023, Mortgage Architects Inc. All Rights Reserved.

Tracy Bennett at 10:21 AM
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