Mackenzie Gartside, Select Mortgage
On October 17, new mortgage rules came into effect at CMHC, requiring all borrowers seeking high-ratio 5-year mortgages to use the Bank of Canada qualifying rate (currently 4.64%) as a “stress test” for mortgage approval. Previously, the rules allowed qualification at the actual mortgage rate (around 2.49%).
When a buyer has less than 20% for a down payment, that’s a high-ratio mortgage. If you’re in this category, the new rules have significantly reduced the mortgage amount you can borrow, and thus the price you can afford to buy a property.
Under the old rule: If you earn $50,000 gross annual income (assuming no other debt), you would previously have qualified for a purchase of $300,000 with a $15,000 (5%) down payment.
Under the new rule: With the same income and down payment amount, you now qualify for a maximum purchase price of about $235,000 – that is a reduction of $65,000 in purchasing power, and makes a huge difference in the type and quality of property you can buy here in the Comox Valley.
If you have questions about your upcoming purchase or mortgage renewal, please give us a call ASAP to find out if the new mortgage rules will affect you.
Mackenzie Gartside is a Mortgage Consultant with Select Mortgage. Find today’s rates online at www.comoxmortgages.com or call 250.331.0800 for a personal evaluation of your mortgage scenario.