18/10/2017
BIG NEWS!
Purchase or refinance now before rules change in January!!
If you’re looking to buy and will have more than 20 percent down, or if you are considering refinancing, then you might want to do so before January 1, 2018. Why? Beginning January 1, 2018, a new 'stress test' will be applied to all new conventional mortgages – The so-called “stress test” is designed to protect homeowners should interest rates rise. Lenders will be obligated to qualify all new conventional mortgages at the greater of the Bank of Canada’s five-year benchmark rate (currently 4.89%) or the contracted rate plus 2%. So if your contract rate is 3.29%, you will be qualified at 5.29%.
Here’s what that might mean for you:
1. You want to buy a home and you have more than 20% down. Your payments will always be based on your contract rate so this new rule isn’t costing you more. However, the new rule might change how much mortgage you qualify for.
2. You want to refinance to pay off debt or buy an investment property. Here too, your actual mortgage payment will not be affected. But the new rule could slow you down by making it more difficult to qualify for your refinance. You may need to wait and accumulate more equity, or look at a lower-rate variable mortgage.
If that refinance is important to securing your own financial health, get in touch ASAP.
3. Your mortgage comes up for renewal next year. If you go shopping for a better deal with a new lender, that will require that you re-qualify… and the new rule will kick in for you too.
Get in touch now – you have the rest of 2017 to get in under the old rules. Going forward, I’m here to work with you early in the process to make sure you are fully prepared for your purchase or refinance. I also have access to non-federally regulated lenders that do not fall under this new guideline. I’m always here to answer your questions, so feel free to call or email at any time!
