Mortgage Financing in a Competitive Housing Market.
Trish Pritchard • February 24, 2021
Canada is an interesting place to buy a property right now. If you’ve paid attention to the media at all over the last few weeks, you’ve probably heard that…
- Many people are still out of work due to COVID-19.
- The bank of Canada has forecasted rates will stay low for a long time.
- Although house prices keep rising, we may be in for a housing crash sooner than later.
While more recently, the media is reporting that…
- Canadian house prices are hitting record highs with no stop in sight.
- There is very little inventory available in housing markets across Canada.
- This week, bond rates have started to rise, and we can likely expect lenders to follow with an increase in fixed rates.
Needless to say, things can change pretty quickly. And while talking about the “Canadian housing market” is a lot like talking about the “weather in Canada”; it varies regionally and will be significantly different depending on where you live, one thing seems to be true, if you’re looking to buy a property, you can expect a competitive housing market.
Some markets will be hotter than others, but buying a home in a competitive housing market can be difficult.
You know you’re in a hot housing market when…
- Properties sell within days of listing on MLS.
- Properties are selling at or above the asking price.
- Properties are selling with competing offers.
- Properties are selling with competing offers well over the asking price.
Unfortunately, this can make you feel…
- Rushed to make decisions out of your comfort zone.
- Like you are being priced out of the market.
- Like you won’t ever find a property.
- Like you may need to change up your strategy to prevent being outbid by competing offers.
Now, if you get to this point in your home buying journey, you might begin to feel desperate. Understandably so. You might even look for ways to get your offer accepted and consider taking risks you wouldn't otherwise take. You may even consider (or be encouraged to) submit a subject-free offer.
While writing a subject-free offer might seem like a good solution to get your offer accepted, you need to know that it comes with significant risk. The biggest risk you take is that your deposit could be forfeit if you write an unconditional offer and your financing is declined.
The only time a subject-free offer is without risk is when you have enough money to purchase the property with the cash you have in the bank. So if you don’t have the cash to buy the house outright, the smart move is to mitigate your risk by including a “subject to financing” clause in the offer to purchase.
Mortgage financing is never guaranteed. The reason mortgage financing isn’t guaranteed is that securing mortgage financing is not only dependent on you the applicant, but also on the condition and value of the property. So even if you have the most stable income, an incredible credit history, and a large downpayment, if you need a mortgage, all lenders will assess the property’s condition and value before agreeing to mortgage financing.
Their scrutiny of the property is the same regardless of whether you include a subject to financing clause or make your offer unconditional.
Unfortunately, if you’re in a competitive situation, this is where you have to make quick decisions and put your best offer forward, but this is also when you’re at the highest risk of making mistakes. There are many reasons a lender can decline your mortgage application; here are just a few of them.
The property doesn’t appraise for what you offer, forcing you to come up with considerably more for a downpayment. This is especially true in competitive situations.
- The MLS listing contains compromising information.
- The property was a former grow op or drug lab.
- The property has a special assessment pending.
- The condo insurance docs aren’t acceptable to the lender.
- The property doesn’t meet zoning or size requirements.
- The lender finds out there is asbestos, aluminum or knob and tube wiring, or an underground oil tank.
- Or anything else they deem too risky to lend money.
So what can you do? Well, the best place to start is to make sure you have all your ducks in a row. Here are things to consider.
- Do you have a mortgage preapproval in place?
- Do you have all the supporting documents submitted to your mortgage professional
- Are you working with a mortgage professional who has outlined the process, including how long they need to arrange financing?
- Do you have rock-solid personal guidelines for making an offer? This will help you to avoid making an emotional last-minute decision.
- Are you working with a real estate professional who is willing to help you stick to those personal guidelines?
Securing mortgage financing in a competitive housing market is tough. So if you find yourself without a concrete plan, please contact me anytime. I deal with high-stress situations like this regularly, and I would love to provide you with the counsel you need.
Saving for a down payment is one of the biggest challenges first-time buyers face. What many don’t realize is that the Canadian government offers a program designed to make it easier—the Home Buyers’ Plan (HBP) . This program allows you to withdraw money from your RRSP to help purchase your first home, without immediate tax consequences. Here’s how it works: Who Qualifies? To be eligible, you generally need to be a first-time home buyer. In practical terms, this means you must not have owned a home in the past four years, nor lived in a property owned by your spouse or partner during that time. There are also special allowances if you’re living with a disability or helping a relative with a disability. In these cases, you can use the HBP even if you’ve owned a home more recently. How Much Can You Withdraw? Under the program, you can access up to $35,000 from your RRSP as an individual. Couples can combine their withdrawals for a total of $70,000 . These funds must have been in your RRSP for at least 90 days before you take them out. Paying It Back The HBP isn’t “free money”—it’s an interest-free loan from your own retirement savings. You’ll have 15 years to repay the full amount back into your RRSP, starting in the second year after withdrawal. Each year, the CRA will send you an HBP Statement of Account outlining how much needs to be repaid. If you don’t make your repayment in a given year, that amount will be added to your taxable income. Why It’s a Smart Strategy The HBP can give first-time buyers a powerful boost toward homeownership. It helps you put together a larger down payment, which can reduce your mortgage amount and monthly payments. Just remember: it’s important to balance the short-term benefit of homeownership with the long-term impact on your retirement savings. Next Steps Thinking about using the Home Buyers’ Plan? Let’s sit down and review whether it’s the right move for you. Together, we can create a strategy that gets you into your first home while keeping your future financial goals on track. 📞 Reach out anytime—it would be a pleasure to guide you through the process.
On October 28, 2026, the Bank of Canada raised its key interest rate by 0.25%, bringing it to 2.5%. If you have a mortgage, are shopping for a home, or have a renewal coming up, this decision matters. Here is a plain-language look at what changed, why it happened, and what it could mean for you.
What Lenders Mean by “Good Credit” When You Apply for a Mortgage Credit is simply the ability to borrow money today based on the trust that you’ll repay it in the future. When you apply for a mortgage, lenders want proof that you’ve consistently honoured that trust by managing credit responsibly. But what does a good credit history actually look like to a lender? The 2 / 2 / 2 Rule Explained If you’re newer to credit or want a simple way to remember minimum mortgage credit requirements, think of the 2 / 2 / 2 rule: 2 active trade lines Established for at least 2 years With a minimum combined limit of $2,000 This is a common baseline lenders use when assessing credit for mortgage financing. What Counts as a Trade Line? A trade line is any account where credit is extended to you, such as: A credit card A line of credit A car loan A personal or installment loan Each trade line reports your payment history to the credit bureau and contributes to your credit score. For a trade line to be considered active , it must: Have been used at least once, and Show activity at least once every three months Why Time Matters Lenders want to see that you’ve managed credit responsibly over time , not just recently. Using two trade lines consistently for at least two years helps demonstrate stable financial habits and reliability. Understanding Credit Limits vs. Balances The credit limit is what matters—not the balance. For example: A $1,000 credit card + a $2,500 line of credit = $3,500 total limit This meets the minimum requirement You do not need to carry a balance to build credit. In fact, the best approach is to: Use your credit regularly Pay it off in full each month (for credit cards) Make all loan payments on time If your lender offers a credit limit increase and you’re managing credit well, it’s often a good idea to accept it. Higher limits—used responsibly—can strengthen your credit profile. A Simple Way to Build Credit Automatically One effective strategy is to: Put recurring bills on your credit card Set up an automatic transfer to pay the balance in full every month Automation helps build positive credit history without requiring constant attention—just be sure to monitor your accounts to ensure everything runs smoothly. What About Credit Scores? Yes, credit scores matter—but they’re not the whole story. If you: Have two active trade lines Established for two years With at least $2,000 in total limits And no missed payments …your credit score will generally take care of itself. That said, it’s still wise to review your credit report occasionally to check for errors or unfamiliar accounts. Final Thoughts If you’re thinking about buying a home in the next couple of years, now is the perfect time to review your credit and make sure you’re on track. Small adjustments today can make a big difference when it’s time to apply for a mortgage. If you’d like help reviewing your credit or understanding how it affects your mortgage options, feel free to connect anytime. I’d be happy to walk through it with you and help you plan with confidence.
