Just a reminder that the new Canadian Mortgage Rules go into effect today. As a quick summary, there are three main changes that you’ll need to remember:
1. Home buyers need to pass a new qualification test: can you afford this home at the 5-year fixed rate? If you take a term shorter than five years you’re going to have to qualify at the new Bank of Canada “qualification rate”.
2. Maximum refinancing to 90% of the value – down from 95%. If you need to refinance, you’ll only be able to access 90% of the value of your home, so make sure to keep your personal spending and other debts under control!
3. Minimum down payment for non-owner-occupied rental properties goes up to 20% from 5%. If you’ve been to a “get rich quick by buying real estate” seminar lately you’ll be disappointed by this new rule. You need more money down to buy a rental and lenders will be pickier about the income you can use from the rental, so buying more than a couple of rentals will get harder for most people.