Remember those proposed changes we talked about last month? Today, October 17^th, 2017, the Office of Superintendent of Financial Institutions (OSFI) just announced this morning that they have decided to go through with two of those three possible changes. These are going to have a impact on how you qualify to buy a home or re-finance.

The two proposed rules that are going into effect in the new year are:

1. Implementation of a stress test for all uninsured mortgages. The new stress test is for all borrowers, all transactions not previously put through the stress test (such as someone with a 20%).
2. Prohibition of bundled mortgages. Bundled mortgages are used to get around regulatory requirements and around the 80% loan-to-value limit on uninsured mortgages.

The second change will affect less than 1% of Canadians. The first change, however, will impact many Canadians. Click here to see the math shown in my previous post. Basically, it equals around 20% less mortgage money than you would be approved for today!

So the big change is coming. Does this affect you? Yes!

• If you are a buyer and hold a pre-qualification or pre-approval.
• If you want to access your home’s dormant equity by refinancing or a HELOC, want to do renovations, or want to consolidate your debt.
• If you’re renewing your mortgage or your renewal is coming up.

The Deadline

If you’re planning on buying (or doing anything listed above), you should get requalified based on the rules now and make sure you get your application in on time. In this case, “on time” means before early to mid-December, 2017. Although the rules only apply on January 1, 2018, from my experience, I would have to guess lenders will start enforcing those new changes at least a couple weeks before they’re required to, just to make sure all of their current applications comply when the rules change. It’s much better to be safe than sorry, so if you’ve got plans, let’s start talking right away.

What can you do?

1. Contact me if you are thinking about any of the above scenarios or just have any questions.
2. Send this information to everyone you know who is buying, selling or refinancing.
3. Contact me early, even if your mortgage renewal isn’t until next year.

The bottom line: If you or anyone you know is even thinking about a mortgage or housing please don’t hesitate to contact me or send them my way. I’m happy to run numbers and see what we can do!

While today’s rules make it difficult for Canadians to secure mortgages from a bank, it is not impossible. As your mortgage broker, I am unbaised; I place my clients with the lender that best suits their individual needs.

We mortgage brokers have access to many lenders aside from the “big banks,” and I’ll always have your best interests in mind.

Herjit Driver

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