The Mortgage World Is Changing Again. Here Is What You Need To Know!

Posted by Kevin Lapp on Monday, November 6th, 2017 at 2:55pm.

*** Canada’s Department of Finance are implementing new mortgage rules effective January 1, 2018.

--> All insured mortgages must undergo a "stress test" that ensures a borrower's ability to make their mortgage payments at a higher interest rate. Effectively, borrowers will be tested against their ability to pay their mortgage if actual rates were as high as the Bank of Canada's conventional five-year mortgage rate.

--> What does this mean for the home buyer? Purchasing power of about $100,000 less.

*** You may recall that the stress test requirements were announced by in October of 2016. This rule followed a long string of new rules that occurred in 2016. At the time, they primarily affected First Time Home Buyers and those who had less than 20% down to put towards a home.

--> Now, those who are coming up to their renewal date or wishing to refinance may find that this will have an impact on them. They may not qualify to borrow as much as they once would have due to the stress testing implication.

*** These changes are significant and they will have different implications for different people. Whether you are refinancing, purchasing or currently have a bundled mortgage, these changes could potentially impact you.

--> It is extremely important that you have a good lender. They can advise on the best course of action for your unique situation and can help guide you through this next round of mortgage changes.

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