Is now the right time to buy real estate? 

(November 01, 2017 )

November 1 2017
Hello!
We're not sure if you have heard about the new update from the Federal Government (Office of the Superintendent of Financial Institution) that was announced last week. As of January 1st 2018, all Conventional Mortgages (Down payment of 20% or more), will now go through a “Stress Test”. 

You need to have an Approval in place by December 15, 2017 (2nd half of December would be very tight due to holidays season) in order to qualify using current lending parameters.  With the new Lending parameters in the new year, Client’s Loan capacity will decrease by approx 20 -25%.Example: If you currently qualify for a loan of $500,000; come January, with the “Stress Test”, that will be reduced to about $400,000 approx. If you currently qualify for a loan of $1,000,000; come January, with the “Stress Test”, that will be reduced to about $800,000 approx. 

Included below is the link to the Policy Update:OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages.
  • Guideline B-20 now requires the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.
http://www.osfi-bsif.gc.ca/Eng/osfi-bsif/med/Pages/B20_dft_nr.aspx 

***Most financial institutions will hold the rate for 120 days  

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