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Showing posts from October, 2016

Government of Canada New Mortgage Rules

Government of Canada New Mortgage Rules - October 2016
Buyers with less than a 20% down payment: As of October 17th, all mortgages regardless of the term will need to be qualified at 4.64%Why? The government wants to allow lending up to what a client can afford if rates were at 4.64% – even if they are only paying 2.39% for their mortgage.As an example, a client of mine with 10% down was pre-approved for a  5 year fixed rate at 2.39% for a mortgage amount of $400,000. With the new change, this same client will keep his rate of 2.39% but can only qualify for $320,000 based on a rate of 4.64%. That is a 20% decrease in what they can afford! Prior to the news the client was able to qualify at their approval rate of 2.39% on a 5 year fixed term.1-4 year terms, and variable rate terms have always qualified at 4.64%, now we add in the 5 year term that most buyers with less than 20% down take.Clients who already have accepted offers with a firm mortgage approval prior to Oct 17th are exempt f…