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New regulations brought in by the Government of Canada will affect who qualifies for a mortgage country-wide from now on.
Effective Monday, insured homebuyers will have to qualify at the posted five-year qualifying rate.
This could hold people back from buying houses as soon as they originally planned.
People who have gotten a loan or have been approved before Oct.3, won’t be affected. People who have officially bought a home before Oct. 17 also won’t be affected by these changes.
According to the BCREA, the change has happened as a “stress test” to ensure that homeowners can still afford their mortgage if their rate were to eventually increase.
Although the interest rate may be 2.39 per cent, homebuyers will now need to qualify at the benchmark rate of 4.64 per cent.
Assuming an income of $80,000, this borrower would qualify for a $475,000 mortgage under the old rules, but only $375,000 under the new rules.
The Government of Canada is also changing eligibility rules for low-ratio, higher than 20 per cent down payment, mortgages back by government insurance. Starting on Nov. 30, to be eligible for government insurance, you must meet a new set of requirements.
Wondering how this might effect Kelowna, read our previous story talking to local mortgage brokers.
How do you feel about the new mortgage rules? Comment below.
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