Some Key Changes To Look For in New Mortgage Rules.
Another important change in 2018 affecting the real estate industry are the changes to mortgage approvals.
Starting January 1st, 2018, the Office of the Superintendent of Financial Institutions (OSFI) will be tightening the qualifying guidelines for mortgage, regardless if your mortgage is CMHC insured or not.
Until now, home buyers with a down payment of less than 20% were required to qualify for their mortgage at the 5 year posted rate, (which is approximately 2% higher than the actual rate). This has been to ensure buyers are more qualified to buy a house and able to sustain any economic shock to the financial system without losing their home.
If you had a down payment of 20% or more you, you would not have to qualify under this stress test rate.
So, this is the big change – OSFI has stated that commencing January 1st, every prospective home owner, regardless of the amount of down payment will have to qualify at the inflated qualifying rate (almost a 2% hike). This also affects you when re-financing your mortgage!
If you are considering a new mortgage or re-finance, we would encourage you to speak with your bank or financial adviser. Be prepared and qualify yourself prior to making a change or shopping for a new home or condo.