What Do The New Rules Mean For Borrowers?

In response to Federal government’s mortgage rules change announcement on Oct. 03, 2016, all the lenders have implemented the new rules in the past few weeks and now the new lending guidelines are in effect.

Here is a brief summary of the new rules:

1). For insured and insurable deals, the applications have to meet the following parameters:

  1. Purchase of owner occupied properties;
  2. Maximum purchase price of 1 million
  3. Maximum amortization of 25 years
  4. Application has to be qualified on Bank of Canada’s Benchmark rate

2). For all other types of applications such as rental properties and refinances, or property value greater than 1 million, they will no longer be insurable by the government.

What does it for mean regular borrowers?

It meant you will be subject to higher rate (0.1% to 0.3% higher) if you meet any of the following conditions:

1.    The purchase price is greater than 1 million

2.    You require more than 25 years amortization

3.    The subject property is a rental property

4.    You require lower contract rate to be qualified (applicable to 5-year fixed term or longer)

5.    You need to refinance a property

At Valueland, we strive to provide the best solution/rate for your situation.

Please contact us if you have any questions or would like to get more information.