Considering credit unions.
Credit unions are known for their low rates, high interest savings options and localized, personable service. But contrary to popular opinion, they aren’t reserved for rural Canadians. They can be a truly valuable asset in helping you grow!
Credit unions already have a pretty great reputation. When we think of these smaller, provincially-regulated institutions we often think of friendly faces and great rates and of a sense of community that a larger federally regulated bank just can’t provide. It’s the same offbeat image that often leads us to believe that they are reserved for rural Canadians, our grandparents, or for people who have a mistrust of the big banks. But in reality, the flexible nature of credit unions can make them one of the most affordable places to secure your mortgage, and can increase your purchasing power by tens of thousands. Thanks to these few differentiating factors, choosing a credit union mortgage can help you afford the home of your dreams sooner:
Skipping the stress test
Because credit unions are regulated provincially rather than federally, they are not governed by the stress test or mortgage qualifying rate (currently the greater of 5.25% or posted rate +2%). This means that on conventional deals (purchases with at least a 20% down payment or refinances) borrowers are able to qualify at the posted rate only. In many cases, this has been an incredible tool for securing clients a larger mortgage with ease.
Better rates
Unlike large, for-profit banks, credit unions are actually non-profit institutions. And due to their localized framework, they are not taxed at a federal level which allows them to keep their costs lower. This means that they are often able to offer lower rates than what you would find in the mainstream banks.
Better rental income consideration
Most big banks and lenders will only consider around 50% of rental income on your application. If you are considering a basement suite etc. to offset your costs and afford more, this isn’t ideal. Credit unions, on the other hand, will look at rentals based on cash flow, or 100% of the income minus operating expenses. This could help you be approved for thousands more, increasing your purchasing power dramatically.
It’s also important to note that thanks to the localized nature of credit unions, their approval process is often much simpler. If you have some bruises on your credit or a non-traditional income, the big banks often won’t take a second look but with credit unions, your whole financial picture is considered meaning these nuances often don’t affect you as much! You can hear more about a couple of our recent credit union success stories here or here.
As always, the best way to know which type of mortgage lender is best for you is to work with a member of our team. But in a changing real estate landscape, remember that there are more amazing options out there than you probably know! Give our team a call today to discuss which type of lender might be best for you.
