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Changes to Insured Mortgages

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Starting October 17th, 2016, borrowers who need an insured mortgage, whether it be a 1year term or a 5 year term will be subject to the “stress test” to be qualified for the mortgage. Currently borrowers who want a five year insured mortgage are qualify for their mortgage based on the actual rates being offered 2.39%-2.49%. NOW, under the new rules the mortgage amount that a borrower qualifies for will be based on the Bank of Canada’s posted 5 year rate which is currently 4.64%. Your actual payment of course will still be based on the lenders discount rate, however, this new policy can result in many Canadians qualifying for a far less mortgage amount then they need to buy a home suitable for their needs. See diagram below for an example .

  Starting October 17th, 2016, borrowers who need an insured mortgage, whether it be a 1year term or a 5 year term will be subject to the “stress test” to be qualified for the mortgage. Currently borrowers who want a five year insured mortgage are qualify for their mortgage based on the actual rates being offered 2.39%-2.49%. NOW, under the new rules the mortgage amount that a borrower qualifies for will be based on the Bank of Canada’s posted 5 year rate which is currently 4.64%. Your actual payment of course will still be based on the lenders discount rate,…

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