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What Happened?

Ottawa announced new mortgage rules on October 3rd, 2016 in response to concerns that some markets in Canada are overheated and that Canadian Debt levels continue to increase.

These changes are meant to stabilize Canada’s housing market.

Here's how it Breaks Down:

The current rules

Buyers with a down payment of at least 5% but less than 20% of the purchase price of a home must pay mortgage default insurance.

When a buyer has 20% or more for a down payment, the lender may get low-ratio insurance to facilitate the funding of the mortgage

Change #1

A Mortgage Rate Stress Test for all insured mortgages.

All insured mortgages will now be qualified at the Bank of Canada benchmark rate, currently at 4.64%.

Why the change?

Government response to concerns that the increasing house prices in Toronto and Vancouver could increase the risk of defaults in the future if mortgage rates go up.  The government is also concerned about rising interest rates and the ability of home owners to afford their mortgages at renewal time.

Who does this affect?

Home buyers with less than 20% down payment who are looking for a fixed rate mortgage must now qualify at the benchmark rate.

Change #2

Safer Lending.  Mortgages insured through portfolio or bulk insurance must now use the same criteria as those that are high ratio insured and must meet the following criteria:

  • Amortization period must be 25 years or less
  • Purchase price is less than $1-million
  • Borrowers have a credit score of 600 or above
  • Property will be owner-occupied

Why the Change?

Rule aimed at lowering the government's exposure to record debt levels.

Who does this effect?

This may lead to increased rates and decreased availability of those programs

Change #3

Closing “loopholes” on taxes.

Capital gains exemptions on principal residences should only apply to residents of Canada.

Why the Change?

Ottawa is responding to reports indicating that some foreign were investors flipping homes and claiming the primary residence exemption.

Who does this affect?

Everyone who sells their primary residence must report the sale at tax time to the Canada Revenue Agency.  Residents of Canada will not be impacted.

Frequently Asked Questions

Will I still be able to buy a house?

Each situation is different. I can help you assess your individual situation and together devise a plan that meets your goals and budget.

Can I still refinance my home?

Yes, up to 80% of the value of the property however you may have to qualify at the benchmark rate.  I can help you navigate the new rules and find a solution that works for you.

Are all lenders affected?

Some lenders do not require insurance for some of their products.  I have access to a variety of lenders and is in the best position to advise you.

I can help

I specialize in providing expert advice and guidance on mortgage products, interest rates and current housing market conditions.  I take the time to first understand your needs, both short term and long term, then recommend the right mortgage and present options.  I understand lenders, continually educate myself and act in your best interest. I help you navigate the often daunting tasks of mortgage lending, especially with the introduction of new rules and regulations.  Whether you are a first-time home buyer, a move-up buyer, an investor or are refinancing a property, please contact me for more information about your individual situation.

Simply, I am here for You.