31 Oct Deciphering practical ramifications of new mortgage lending rules
On January 1, 2018, new rules related to mortgage lending will be instituted by Office of the Superintendent of Financial Institutions (OSFI). What do these changes
mean for you if you’re looking to borrow money for a mortgage? Obviously, there are a lot of dry, complicated numbers, figures and percentages to wade through, but I’d like to try to break down for you what these changes will mean for those who interested in borrowing money for a home. I will also present some options for you to consider if you’re in the position of being hit hardest by the new rules.
In her October 15, 2017, article, MoneySense senior editor Julie Cazzin succinctly laid out the forthcoming changes and the ramifications thereof for potential borrowers: “OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages (mortgage consumers with down payments 20% or greater
than their home price). The rules now require the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by
the Bank of Canada (presently 4.89%) or 200 basis points above the mortgageholder’s contractual mortgage rate.”
These new rules are designed to put the slow down the housing market. At this point, it appears that it has the potential to do much more than that. Ms. Cazzin’s
article breaks it down this way: after the rules come into effect, you’ll be able to “afford 20% less house” than before. Indeed, in purely practical terms (ignoring for
a moment the cold, impersonal percentages and numbers) these changes will have a significant impact upon anyone who requires mortgage financing. Anyone. Let that sink in for a moment.
Ms. Cazzin’s advice to those who will be affected by the changes is not terribly encouraging. “So if you’re a first-time homebuyer,” she says, “it may mean renting a
little longer and waiting for your income to go up before you’re able to buy your first home. Alternatively, some first-time buyers will buy less—maybe a condo instead of a pricier detached home. Or, the new buyers may opt to get a co-signer to qualify under the new rules.”
In her conclusion, Ms. Cazzin offers sound advice, for sure, but does not posit anything in the way of tangible options. “But whatever you do,” she says, “if you’re a
first-time buyer, make sure you understand what you qualify for using the new regulatory rules, and get a pre-approved mortgage before you start house-hunting.”
Many people are facing an uncertain future and are understandably confused by the complexity of the rules and how these changes will affect their chances of securing the financing they need to afford their dream homes. This is where I come in.
Through my years of funding large mortgages, I’ve established both an impeccable reputation and solid working relationship with lenders and banks. By specializing in funding large mortgages at a wholesale volume, and through my understanding of banks products and rules, I’m able to provide my clients with lowest rate mortgages, with the minimal down payment on mortgages of one million dollars and over.
Whether we’re talking about a mortgage of, at minimum, $800,000 or even 5.6 million, I offer you the best term, lowest rate and at the lowest down payment.
You don’t have to face these challenges alone. I am here to help you secure the mortgage you deserve.