FEDERAL GOVERNMENT CHANGES RULES FOR MORTGAGE QUALIFYING
*** October 3, 2016 *** The Federal Government announced today they are changing the rules around mortgage qualifying. Effective October 17th, 2016 anyone who is qualifying for a high ratio insured mortgage (buying a home with less than 20% down payment) will have to qualify at the Bank of Canada Benchmark rate.
Currently if you have less than a 20% down payment you can qualify at whatever interest rate the bank is offering as example 2.39% for a 5 year fixed rate. On October 17 you will be charged the lower rate on your mortgage, BUT you have to qualify at the Benchmark Rate which today is 4.74%.
So what does this all actually mean?
On a mortgage of $400,000.00 you will then have to qualify for around $500.00 more in mortgage payment or to put it in other terms the average person will qualify for 20 – 25% less of a mortgage than they do today.
THERE IS A VERY LIMITED WINDOW TO GET DEALS IN FOR APPROVAL AT THE LOWER INTEREST RATES. This change will not only affect purchasers, but sellers as well as clients will qualify for less.