What Are The New Mortgage Rules?
All insured mortgages in Canada will be underwritten using posted rates to qualify base on the borrower’s income. For perspective, based on today’s rates, that means a borrower that could qualify for a mortgage at a 5-year fixed rate of 2.29% now will have to qualify – as of the 17th of October – at the qualifying rate of 4.64%
What does this all mean?
Starting October 17th – any mortgage approved with less than 20% down payment requires that you qualify as if the interest rate is 4.64%. This will affect you if you are buying near the max allowable debt ratios.If you have already been approved for a mortgage and are waiting to take possession of your home, the current rule still applies to you. For those who are pre-approved (but have not yet made and offer of purchased a home) the new rule changes will affect the amount a new home purchaser can qualify for. For example a family that earns $100,000 and has a $40,000 down payment could qualify for a mortgage of more than $665,000 under the current rules, but only about $505,000 under the stricter new rules.
As a potential New Home purchaser what should I do?
If you’re currently in the market for a new home and have been pre-approved, delaying your offer to purchase because you are on the fence may cost you.Talk to one of our Area Managers today! Read the full details from the Canadian Department of Finance – http://www.fin.gc.ca/n16/data/16-117_2-eng.asp