Homes: New mortgage rules affecting many

Kelowna columnists examine new rules for mortgages

The new mortgage qualifying rules now require a minimum qualifying rate for insured and uninsured mortgages (those with a down payment of 20 per cent or more) to be the greater of the five-year benchmark rate published by the Bank of Canada (currently 5.14 per cent) or two per cent above the mortgage holder’s contractual mortgage rate. Typical contract rate today for a purchase with a 20 per cent down payment is 3.49 per cent which means you must qualify at a rate of 5.49 per cent. Regardless of your down payment or the equity you have in your home you are now required to pass the stress test with the major banks and monoline lenders.

While these changes were thought to be mainly felt by first time home buyers, existing home owners and repeat home purchasers with large down payments are finding themselves adversely affected by the new rules as well. What you qualified for last year is not the same as what you would now qualify for today with the new stress test. An existing home owner with annual income of $100,000 who purchased a home last year for $775,000 with a 20 per cent down payment/30 year amortization would today under the new stress test have their buying power reduced to $625,000 or lower. This mortgage would also require a 20 per cent down payment/30 year amortization.

It is so important to be aware and understand where you will now qualify before you make a major move to sell your home and look to purchase another. Even if you are looking to simply port this mortgage to another property you would have to qualify with the stress test to do so and may come up short. If you are looking to refinance your mortgage the stress test also applies. The exception is on renewal. If at renewal you opt to stay with your existing lender and accept the rate you are offered at renewal you presently are not required to pass the stress test.

Mortgage brokers have access to numerous lenders and not all lenders are required to perform the stress test procedure. There are options available to you and if you are interested in knowing where exactly you will qualify and what rate is available to you with or without the stress test we welcome your call. Any move in the housing market should always start with a pre-approved mortgage. Not only will a pre-approved mortgage guarantee you a rate for up to 120 days it will also provide you with the satisfaction and peace of mind in knowing exactly where your purchase ceiling is before you start the process.

Of Prime Interest is a collaboration of mortgage professionals and we welcome your questions. Trish Balaberde (250-470-8324) , Darwyn Sloat (250 -718-4118) and Christine Hawkins (250-826-2001).

To report a typo, email:
newstips@kelownacapnews.com
.


@KelownaCapNews
newstips@kelownacapnews.com

Like us on Facebook and follow us on Twitter.

Just Posted

Former Kelowna hockey player dies after battle with ALS

Mitch Wilson was born in Kelowna and was 57 when he died

Toddler sustains serious injuries after falling from Rutland balcony

RCMP are investigating after a two-year-old boy fell from the balcony of an apartment on May 18

Witness says Kelowna man on trial for murder admitted to the killing

Steven Pirko is charged in the killing of Christopher Ausman in 2014

Bus pull returns to Kelowna with record 17 teams

Teams of eight people will pull a BC Transit bus for their community on May 25

Search for missing kayaker turned over to West Kelowna RCMP

A 71-year-old man’s kayak floated ashore on Friday

Killer of Calgary mother, daughter gets no parole for 50 years

A jury found Edward Downey guilty last year in the deaths of Sara Baillie, 34, and five-year-old Taliyah Marsman

Update: Plan to see more smoke from South Okanagan wildfire

Richter Creek wildfire, 12 kilometres west of Osoyoos, is an estimated 400 hectares

Body of missing snowmobiler recovered from Great Slave Lake

Police confirm the body is that of one of three missing snowmobilers

North Okanagan tests out two $10/day childcare sites

Katrine Conroy came to Vernon to tour universal child care prototype sites, including the one at Maven Lane

Penticton sets cap of 14 cannabis stores, removes buffer zone

The city previously relied on a buffer zone and scoring matrix to limit number of stores

Okanagan medical cannabis shop shutting doors

Herb’s Health Centre has been operating without a city business licence for nearly a year

Bucking bulls return to Okanagan raceway Sunday

Bull Riders Canada returns to the South Okanagan with some of the top riders in Canada

Okanagan city to give out fines for sitting on sidewalk

Residents of Penticton will soon be fined for sitting or laying on sidewalks

Cost jumps 35% for Trans-Canada Highway widening in B.C.

Revelstoke-area stretch first awarded under new union deal

Most Read