As we reported last month, the federal government was thinking about cooling down Canada’s overheated housing market by making it more difficult for Canadians to qualify for a mortgage. In February, the Minister of Finance introduced some new rules to do just that. Starting April 19th, if you apply for an insured mortgage, here’s how you’ll be affected:
• To qualify for a mortgage, you’ll have to meet the standards for a five-year fixed rate mortgage even if you choose a shorter term or variable rate (currently, you have to meet the three-year standards). Lower rates and shorter terms will still be available, but they’ll be harder to qualify for.
• If you’re planning to refinance to access extra funds, you’ll only be able to withdraw up to 90% of the value of your home (currently, you can withdraw up to 95%).
• If you’re thinking of buying a revenue property, the minimum down payment will rise to 20% for non-owner-occupied properties (it’s currently 5%).
Obviously, if you’re thinking of buying, refinancing or investing in a revenue property, now’s the time to do it, while mortgages are still easier to qualify for. Even if you’re thinking of selling, you may want to act now since prices are expected to drop after April 19th. For more details on the new rules and a free analysis of how they might affect you, please call me today.
