08/28/2020
INFORMATION! INFORMATION!
What is the mortgage stress test?
New mortgage rules introduced in 2018 require all Canadian home buyers to undergo a mortgage stress test – even if you make a down payment of 20% or more. Previously, you would only have your mortgage stress tested if you made a down payment of less than 20%.
What does this all mean to you the consumer?
Basically, it means that institutional mortgage lenders such as banks do not use the rate they will be offering you to determine what you qualify for in terms of mortgage amount.
For example current mortgage rates for a 5 year fixed term are generally under 2%. However, the mortgage qualifying rate that is used to determine your maximum mortgage amount is actually 4.79%. If you’re buying a home the new mortgage rules will have a direct effect on how much you can afford. You’ll have to prove that you can still make your monthly mortgage payments if interest rates were to rise in the future. Great cushion for the banks and insurers and a good tool to ensure that consumers do not over-extend themselves.
Does this all sound confusing?
Luckily you don’t have to do this alone! One call gets you over 30 years of experience and expertise. Call today Nick Tassone for any mortgage questions or to get a rate quote at 705-759-3134 or 705-946-9240.
