How Will The New Mortgage Rules Affect Me?

Federal Announcement October 3, 2016

Mortgage Rule Changes announced this morning, what do they mean for home buyers?

First of all, those of you who already have a signed commitment in with a lender are un-affected, please do not worry! This PSA is directed towards people who are currently shopping for a home or have a home for sale and will be purchasing in the near future!

The first changes are to tax rules for non-resident buyers, which will impact some market places more than others.

Perhaps of greater impact is the change to the rate at which we need to qualify buyers. We will now need to use the Bank of Canada posted rate, not the contract (discounted) rate that we currently use.

What does this mean in simple terms?

Lets use an example of a $300,000 mortgage:

Currently, we can do this:

Mortgage: $300,000
5 year fixed rate: 2.49%
Monthly Payment: $1,342

In a few weeks, we will need to qualify based on a higher rate, so although your actual mortgage payment will remain the same, we will need to prove to the lender that you are able to absorb a higher rate in the future that could potentially look like this:

New 5 year qualifying rate: 4.64%
Monthly payment: $1,683

Again, your actual mortgage payment will not increase, that will still be based on your discounted contract rate. Our government wants to ensure that if rates do rise in the future, that it will not cause undue stress on your financial well being, and that you are able to absorb that increase.

Clear as mud right??

If you are currently pre-approved, please contact your broker to ensure that these new rules will not negatively impact you.

Our office will be contacting all of our clients in the pre-approval process as well :)

I have attached the actual announcement to this post. Call 403-588-8657 if you have questions!

http://www.fin.gc.ca/n16/data/16-117_1-eng.asp?platform=hootsuite


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