As we all know the government has new mortgages rules that will fall into place in the new year. Kerri Becker from the Royal Bank of Canada has simplified the new rules below with a great example on what you will be able to afford. Contact us with any further questions!
Effective January 1, 2018 residential mortgage borrowers with a down payment of more than 20% will need to qualify at a significantly higher rate. This change was announced on October 17, 2017 by the Office of the Superintendent of Financial Institutions (OSFI).
Under the new guidelines clients will need to qualify at a rate of 2% higher than the rate they choose or the government’s qualifying rate currently 4.89% (whichever is higher)
For example for a client to buy the same average home in Canada (slightly over $500,000) after the change, a buyer will now need to have a minimum income that is $16,000 or 18% higher than is currently needed based on the new guidelines.