New Mortgage Rules




New Mortgage Rules

Earlier this month the Bank of Canada announced changes to the way Canadians get mortgages, especially if you’re only putting down 5%.

While this doesn’t have a huge impact on farmland it does affect everyone looking to purchase residential real estate. In fact the changes that take effect on October 17th will make a HUGE impact on Canadian’s ability to afford residential properties.

Starting October 17th, all insured mortgages will have to qualify at the 5 years posted rate which is currently sitting at 4.64% instead of the discounted rate of 2.5%. The reason behind this is because the Bank of Canada want’s to “Stress Test” Canadians ability to pay for the real estate they buy, as well as prevent foreign investors from purchasing residential properties and claiming them as their primary residence.

The downside to this, is that for the average Canadian putting less than 20% down it will drop the affordability of a buyer from $300,000 to $240,000. So if you’re a first time home buyer, or are looking at buying a home for a family member, now is the time to buy, as your ability to qualify for the higher mortgage will end on October 17th.

Here is the original link to the announcement on the Globe and Mail:

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