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Will the New Mortgage Rules “Stress” You Out?

October 20, 2017

On Tuesday, the federal government announced mortgage rules that will affect most home owners across the country.  This rule is simple to understand – beginning January 1, 2018 (whether you are buying or refinancing) if you get a mortgage and the interest rate is 3%, your lending institution must use a rate 2% higher (i.e., 5% in this scenario) to qualify you for your mortgage.  They call this a “STRESS TEST” because it forces lenders to make sure their clients (you) can afford a rate increase of 2%.  The new rules remove 18% of an individual’s buying/refinancing power – so if you qualified for a $600,000 mortgage today, come January 1st, you would only qualify for $488,000 mortgage (a decrease of $112,000).

This Is Significant – You Just Lost 18% Of Your Buying Power.

On another note, if your mortgage is coming due with your current lender these rules do not apply.  However, many of our clients like to shop the market to ensure that they have access to a mortgage with a competitive rate, terms and conditions.  These new guidelines may prevent you from shopping your mortgage when it matures.

This new “Stress Test” will put more stress on Canadians who want to buy a home or refinance their mortgage. We will see what affect this has on the housing market but suspect everyone will be a little more stressed in 2018.

Call MonsterMortgage.ca Before The Rules Changes Stress You Out 

What is your next move?  Well if you are thinking about any of the following:

your mortgage is up for renewal over the next 6 – 8 months
you want to buy a property
you want to refinance your existing property to renovate or pay off some bills

…you may want to consider doing this before January 1st ,2018.  After that day you will lose 18 % of your buying and/or refinancing power! Fill out the form at the top and speak to MonsterMortgage.ca mortgage experts today to learn how these rule changes will impact you.