"One of the challenges facing existing homeowners may be obtaining the best financing at renewal. As a result of the new mortgage stress test, (which requires borrowers to qualify at 2% above the contract rate, or the Government of Canada qualifying rate, whichever is more) many people may find that transferring their mortgage to a different lender at renewal may not be possible. Because of this, incumbent lenders may find they're able to offer less palatable renewal rates to their clients, ensuring higher profit margins. The homeowner is stuck between a rock and a hard place in this scenario. It can be expensive to renew, but even more expensive, or impossible, to move. This is when the advice of a qualified mortgage broker comes in handy."
Most people are aware of the recent rule changes, but many thought it only impacted new mortgages, when in reality, if you're looking to refinance, or switch lenders, you'll have to be approved under the new rules. In the past, when it came time to renew, many people would shop around, find the best rate and then negotiate with their current lender or switch for a better rate. Now, if you want to switch, you're going to have to re-qualify, and if you can't qualify... you're going to be stuck with whatever your current lender offers.
Another common practice is refinancing at the time of renewal (adding other debts onto their mortgage) and refinancing will also have to pass the stress test now.
So, if you're coming up for renewal, I would talk to your current lender, as well as a mortgage broker, and see where you can get the best deal. Just be prepared for higher rates and a "stress test."
Posted by Liv Real Estate
on
Looks like the current government want to make it as difficult as possible for families to keep their homes.
Posted by GM on Wednesday, March 21st, 2018 at 6:48amBoy, it sure seems like Justin hates Canadians.
Tony, if that happens we'll all be affected unless you have all your assets in US or Europe...
Posted by bubu on Thursday, March 22nd, 2018 at 11:38pmLock it for 5 years... By the end of next year or 2020 spring we might see 3-3.4% BoC rate and mortgage rates over 5%. Next increase will be before summer this year... Inflation is already over 2% target by BoC.
Posted by bubu on Friday, March 23rd, 2018 at 2:53amI'm hoping Trump will put tariffs on everything coming out of China. That will push up the U.S. dollar and push interest rates much higher as the cost of living skyrockets in America. Canada will have to follow or suffer a sub 50 cent dollar. I'm not sure what will come first a 50 cent dollar or another interest rate increase in Canada with Poloz at the helm. Poloz only cares about the home owners in Brampton and Mississauga.
Posted by Tony on Friday, March 23rd, 2018 at 5:47amThis might be the year I finally buy a condo!! Haha I'm the most risk averse person ever but condos are really quite affordable now.
Posted by Alka on Saturday, March 24th, 2018 at 6:39amWill see. I say this every year, while I keep living with in my parents house
If someone loses their house because they're leveraged to the hilt and didn't factor in the possibility of rising interest rates, then they probably deserve to lose their house. It's not as though we had an insane hike to the interest rates of the 80's - rates are still near historic lows, even at the current "higher" rates.
Posted by Taraz on Sunday, March 25th, 2018 at 7:17amLeave A Comment