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New Mortgage Rules 2018

New Mortgage Rules Coming January 1, 2018

The government is changing how Canadians must qualify for a Conventional Mortgage.  Starting January 1, 2018, anyone purchasing a property with 20% or more down payment, or anyone refinancing an existing mortgage, must qualify at the greater of the Bank of Canada Benchmark Rate (currently 4.99%) or the Contract Rate of the mortgage plus 2% (ie. 3.29% + 2% = 5.29%).

The effect of this change on the average mortgage borrower will be a 20% reduction in borrowing power.  For example, if you can qualify today for a mortgage of $400,000, then after January 1st this maximum will be reduced to $320,000.

The new rules are being implemented as follows:

  • If the Purchase Contract is dated prior to January 1, 2018, regardless of the Closing Date, the old rules will apply.
  • If the Purchase Contract is dated January 1, 2018 or later, the new rules will apply.
  • Any Mortgage Refinance submitted and approved under the old rules prior to January 1, 2018 must close within 120 days of the new year.
  • Any pre-approvals that have not been activated with an accepted Purchase Contract prior to January 1, 2018 will not preserve qualification under the old rules, although the associated rate hold will stay intact.

For more information about these new mortgage rules and how they will affect you, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821

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