Mortgage Blog

How Much can You Afford in Maple Ridge and Pitt Meadows With the New Mortgage Rules

October 27, 2016 | Posted by: Tania Kalinich

How much will the new Mortgage Rule affect you?

You have heard in the media over and over the Government of Canada recently changed the qualifications for Canadians buying homes with less than 20% down payment.

The new rule means you must now qualify with the Bank of Canada Qualifying Rate.  Although your mortgage rate is maybe 2.39% you must qualify at this higher rate. This qualifying rate is set by the Government of Canada which is currently 4.64%.  The idea behind it is to ensure that Canadians can handle future rate increases and not be in a position where potential rate increases puts them at financial risk.

Previous to this most recent policy change, consumers that took mortgage terms other than a 5 yr Fixed had to qualify at the Bank of Canada rate already.  Some buyers did not and were therefore forced to take a 5 yr fixed so that their Gross Debt Service & Total Debt Service Ratios where in line.  This allowed some buyers to purchase higher valued properties.  This will change with the new rule that now is applied to all mortgage terms when you have less than 20%.

It is estimated that the new rules will affect approx. 30% of borrowers.  This is not to say they can no longer buy, but their buying power has been reduced.

I’ve attached an example that shows you the income required for various mortgage amounts.  It is however always important to check with me directly if you want to know your borrowing power.  Every person’s scenario is a bit different so please, if you have any questions call me. 604 376 4997

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