First-time Home Buyers Beware

For those of you who hasn’t been following the news in mortgage regulations in Canada, there has been some major change in the past month.  Effective November 30, 2016, all insured mortgages will be subject to a mortgage stress test whether you are putting more or less than 20% down payment.  The purpose of the test is to measure if a borrower could still afford to pay back a loan if the rate increases to the Bank of Canada’s posted five-year fixed rate.  This rate is usually significantly higher that what banks or other lenders offers; thus, approved loan will be significantly lower for most buyers or even unqualified for a loan.  Although the new regulations won’t go into full effect until November, we are already seeing transactions collapsing due to financial difficulties. While everyone’s situation is different, it’s best to consult with an experienced mortgage broker before you proceed with the transaction.   Perhaps we will just have to wait and see the real effect this change will do to the Canadian housing market.  For more information, you can visit Department of Finance Canada website or simply call me at 604.761.7546 and I will do my best to assist you!