Mortgage qualifications are changing!

If you haven’t heard, the Government of Canada, Department of Finance is changing their mortgage qualification rules. As of October 17, 2016, you’ll be required to take out insured mortgages on purchases with less than 20% down payment. Basically, that means you’ll have to qualify using the Bank of Canada benchmark rate, which makes it more difficult to qualify for the mortgage you need to buy your new digs.

If you’ve been shopping around, make sure you get a mortgage pre-approved before October 17, 2016. As long as you sign your purchase contract before October 17 the old rules still apply.

Elevation Mortgage puts it into perspective with this example:

Before changes:

Qualifying rate of 2.39% 5 YR Fixed:

Income: $60,000 annually

Down payment: $20,000 (5%)

Max purchase price: $400,000 (with no other debts)

 

After changes:  

Qualifying Rate of 4.64% 5 YR Fixed:

Income: $60,000 annually

Down payment: $20,000 (5%)

Max purchase price: $330,000 (with no other debts)

 

That’s $70,000 less! Even though this scenario is subjective to things like your current income, current debt load, down payment amount, and employment situation, your should do yourself a favour and avoid disappointment by getting qualified now.

 

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