DON’T BE LEFT OUT IN THE COLD: NEW MORTGAGE RULES IN EFFECT JANUARY 1ST!
Starting January 1, 2018 a new stress test will be applied to all new conventional mortgages-and not just those mortgages that require mortgage insurance (downpayment or equity of less than 20%).
What does this mean for you?
The so-called stress test is designed to protect homeowners should interest rates rise. Starting January 1st lenders will be obligated to qualify new conventional mortgages at the greater of the Bank of Canada’s five-year benchmark rate (currently 4.99%) or the contracted rate plus 2%-meaning if your contract rate is 3.29%, you will be qualified at 5.29%.
This new rule may change how much of a mortgage you qualify for. If that’s the case, you may need to look at purchasing a less expensive home, saving up for a larger down payment, or reducing any other debt you may be carrying. Another option is to take a look at a variable-rate mortgage that will lower your qualifying rate (if the rate plus 2% is less than the benchmark 4.99%) and has the option to convert to a fixed mortgage.
Here is an example of your maximum purchase would look like today vs January 1st:
*info courtesy of Ingrid Patry, Invis Canada’s Mortgage Experts www.IngridPatry.com
If you are thinking about purchasing a property in the foreseeable future be sure to review this new information-don’t be left out in the cold!
Contact Karen Cayer and your Mortgage Broker today!
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