I’ve noticed that there seems to be some confusion in the marketplace about some of the new mortgage rules
The good news is that these rules have not impacted the broadest section of the market as much as some had anticipated. As a quick summary, I’ve listed the major changes below – along with a counterpoint which allows you to still qualify in most cases:
1. Home buyers need to qualify at the Bank of Canada Qualifying Rate instead of the contract rate on mortgage terms less than 5 years or on variables.
Suggestion: get a five year fixed if you need to. It’s not the end of the world and the rates are quite attractive.
2. Property investors need to put 20% down on rental properties.
Suggestion: Access equity in another property to put more down. The reality here is that most investors were already doing this – the new rule will simply eliminate get-rich-quick schemes and undue speculation.
3. You can only refinance up to 90% of the value of your home (previously 95%).
Suggestion: This is a prudent move and will protect you in the long run. Consolidate as much as you can with home equity and then try to obtain a personal line of credit to take care of the rest.
4. Business for Self clients – CMHC has narrowed the window that business-for-self clients can use “stated income”.
Suggestion: We can choose to use Genworth Financial or Canada Guaranty to insure the mortgage instead of CMHC because they have more flexible rules.