For months now we’ve known that the federal government was planning to tighten mortgage rules in April. Buyers now have to qualify for a five-year posted fixed rate when they choose a 1 – 4 year term or variable rate. And people who are refinancing can only withdraw up to 90% of the value of their home instead of 95%. But now CMHC (Canada Mortgage and housing Corporation) has also announced tighter rules for real estate investors and self-employed borrowers. In raising the down payment for 1-4 unit rental properties (non-owner occupied) from 5% to 20%, the rules for rental offsets have also been changed. Now the rental offsets have made it much more difficult to qualify for a mortgage on a rental property.
New rules also affect self-employed borrowers with more than three years in the same business and commissioned-income borrowers. They now have to provide financial statements, T1 Generals, Notice of Assessments, T4s, etc. to qualify for CMHC’s Self-Employed Product. Also they can only qualify to 80% of the value of the home. However, there are other Default Insurers who will consider 90% of the value of the home.
As your local mortgage specialist, I recommend that you start shopping for your next mortgage well in advance. By analyzing your situation, I can show you a wide range of still-affordable options, including alternate mortgage insurers who offer less stringent rules in some cases. Please call me today for a free mortgage analysis.
