Since January 1, 2018 became effective the new regulations that determine the qualification for a mortgage and consequently for the purchase or refinancing of your home.. (Read it in Spanish – Leer en Español)
Under these new rules, people who obtain, renew or refinance a mortgage must show that they could face interest rates substantially higher than the contract rate. This form of qualification is called “Stress Test”.
This rule was previously established for people who buy their house with less than 20% initial. It means that before January 1 this rule did not affect buyers who had an initial investment of 20% plus.
With these changes, confusion arose among people who are in the process of buying or refinancing their property, of which I was answering questions during the last few days. The most common ones are listed below. However, I emphasize this, if you have doubts or want to be advised correctly contact me to see your case in an objective and personalized way and thus, maximize your purchase or refinance. I want to emphasize that my advice is free for you.
• How is the qualification based on the new standards?
There are 2 types of interest rate used for the rating: One is the contract rate and the other is the “Bench Mark Rate” or “Reference Rate”. The reference rate (now 4.99%) is used to qualify and the contract rate is the rate you would get if you pass the test.
• What is the difference between the two rates?
The difference is approximately 2%
• Can I buy a property with 5% down?
Yes, if you qualify for the 4.99% benchmark rate.
• How the new regulation affects my purchase price?
If you previously qualified for a $ 400,000 home, with this new regulation, you might only afford a house of approximately 340,000 if everything else remains the same.
• If I have more than 20% for down payment, can I be except of this rule?
No, as of January 1, 2018, all mortgages are regulated by this new rule, no matter how much down payment you have available.
• Where can I see quality properties for sale in the Calgary area?
This website is the fastest and most accurate. www.RealHomesCalgary.com Here you will find all the properties recently released to the market and it is updated very frequently during the day. You need to sign up to have unlimited Access though.
I hope I have clarified some of the doubts regarding these changes. If you would like to know if you qualify or how much you can buy now, do not hesitate to contact me.
At Your Service:
Mortgage and Real Estate Professional
Legacy Real Estate Services & Mortgage Alliance of Canada
403 990 4817