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New Mortgage Regulations Are Here – How ‘Stressed’ Do You Need to Be?

New Mortgage Regulations Are Here – How ‘Stressed’ Do You Need to Be?

Couple on couch relaxing not stressed about new Mortgage RegulationsWhat was the biggest news in mortgages and real estate in 2017? Without a doubt, it was definitely the new federal mortgage regulations, including the new ‘stress test’ requirement, slated to come into effect January 1, 2018.

Now that the new year – and the new regulations – are finally here, many families in Barrie and surrounding areas may be wondering just what exactly these new rules mean and how they may be impacted by these recent changes. To help you better understand, here’s a helpful review of the new regulations, how they may affect you and your family moving forward, and the options that may be available to help you avoid any mortgage regulation-related stress.

The facts about new mortgage regulations

  • Canadians applying for a mortgage, or refinancing or renewing their mortgage in 2018 and beyond will need to prove that they would be able to handle an interest rate significantly higher than their current rate (anticipating an actual increase in mortgage rates to make sure people will still be able to make their mortgage payments)
  • This ‘stress test’ will be applied to anyone who applies for a mortgage at a federally-regulated financial institution, even if they have a down payment of 20 percent or higher
  • Approximately 10 percent of Canadians who were approved for an uninsured mortgage during the last two years would not be approved under for a mortgage these new regulations.

What this all means for you and your family

  • Depending on the timeframe, you might not be affected by the new regulations. If you signed a purchase of agreement before January 1 or if your lender is providing a grace period after Jan 1st, you may be exempt from the new regulations
  • For those who have a down payment of 20 percent or higher, the new stress test requirements mean that you may need to either purchase a less expensive home than you were originally planning to buy, or wait until you can add more to your current down payment savings
  • For those who are looking to refinance or renew their mortgage, the new regulations stipulate that lenders are not required to apply the stress test to those renewing or refinancing. Although this may seem like good news, it could also mean you may be forced to re-sign with your current lender – without the ability to shop around for a better rate or term

 The silver lining

Before you decide to “settle” on a home purchase that is far less than you originally intended, or agree to refinance with your current lender without shopping around for a better rate (or worse – give up on your home purchase dreams altogether), it’s important to understand that there are other options available that you may qualify for. By using a certified mortgage broker like myself, you could possibly avoid the stress of the stress test because of the different options available through my partnerships with various lenders. Additionally, you don’t pay brokers for this service – the lenders look after that. As a professional mortgage broker, it’s my mission to help clients look at all their financing options, and I want to ensure you get the best mortgage that’s tailor-made for you. There is no need to be stressed; call me today at (705) 315-0516 and let’s get started.

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