If you’re looking for a home odds are you’ve heard rumblings about the new mortgage rules announced by the Federal Government on October 3rd. These rules were implemented for the purpose of improving (and protecting) the financial security of those seeking mortgages, and in turn protecting the longer term stability of the Canadian housing market. Since these new rules will make it more challenging for many people to obtain a mortgage it’s even more important for home buyers to seek professional advice to ensure they are able to secure the best possible rates.
There is no real significant change for those who have more than 20 percent to use as a down payment, so more and more people should investigate ways to increase their down payment to ensure the smoothest possible mortgage application process (for simple ways to increase your down payment click here). Those who have less than 20 percent to use as a down payment will need to consider a number of additional checks and measures before securing a mortgage.
Rather than worry about comparing and contrasting old regulations to current, it’s easier just to highlight the new standards (since the old ones are no longer relevant to those in pursuit of a mortgage post October 3):
- All home buyers with less than a 20 percent down payment must qualify at the Bank of Canada rate in order to obtain a mortgage (The BOC rate is significantly higher than lending rates for other institutions, so qualifying will be more challenging)
- All lender insured mortgages will be required to meet the following eligibility criteria:
- Property must be occupied by the owner
- A maximum mortgage amortization of 25 years
- A maximum property purchase price of, or below $999,999.99
- Strict debt servicing ratios
To learn more about the new mortgage rules and how it may affect you, click here
For additional information on how to maximize your lending potential, and how to navigate this ever-changing real estate market contact a mortgage broker today!