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New Mortgage Rules

Posted by admin on October 10, 2016
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I have been receiving many calls about recent mortgage rule changes in Ontario, though many links been shared but was not fully consumed as a layman. Find below the explanation that will help further untie the knot!

Starting October 17th, 2016, borrowers who take out insured mortgages that are fixed-rate loans of five years or longer will be subject to a more stringent “stress test”. Currently borrowers who take a five year insured mortgage (less than 20 percent down payment) qualify for their mortgage based on the actual rate they receive. Now under the new rule the mortgage amount that a borrower qualifies for will be based on the Bank of Canada’s posted 5 year rate which is currently 4.64%. Your actual payment of course will still be based on the rate you actually receive from the lender. This would result in most Canadians qualifying for a far less mortgage amount then they had anticipated.

As Mr. Morneau states “This would create a “buffer” to ensure that Canadians will continue to be able to easily service the mortgage payments in the event interest rates rise.”

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