Clarifying the Mortgage Rule Changes
October 24, 2016 | Posted by: Harley Rivet
With so much media and so many different angles being discussed regarding the new mortgage rule changes, we break down your most asked questions — What, Who and Why? — And how WE can help!
“The new mortgage rules announced by the Federal Government on October 3, 2016 caught the entire industry by surprise and we continue to assess the potential impacts of these changes.
Our current view is that the new rules will make it more difficult and more costly for many Canadians to obtain a mortgage. Customers more than ever need to turn to mortgage brokers as we have access to many lenders and products that can meet everyone’s unique borrowing needs”— DONG LEE, President, Mortgage Architects.
Why is the Department of Finance implementing these new changes?
These new regulations are aimed at protecting the financial security of Canadians and supporting the long term stability of the housing market in Canada.
What is it?
Currently insured mortgages with a term of less than 5 years, and/or a variable rate mortgage had to qualify on the Bank Of Canada (B.O.C) rate. Under the new Department of Finance regulations, all insured mortgages, regardless of term (fixed or variable) will now have to qualify on the B.O.C rate. This requirement will also be extended to low ratio mortgage insured mortgages effective November 30th, 2016.
How does this affect a home buyer with a down payment of 20% or more?
There is no significant impact for home buyers placing 20% or more more down. OneSt has many different options and there are still a variety of solutions for the majority of home buyers.
Do I still have the option to refinance my home?
Yes, home buyers will still have the ability to refinance up to 80% of the value of their property. Specifics may differ from lender to lender.
Next Steps
The challenge through the upcoming days will be to re- think strategy and get pre-approved again with the stress test factor included. Start the conversation to perhaps either increase down payment or start the process of looking for a new home within your NEW imposed budget.
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