Mortgage rules changed

The new federal mortgage rules came into effect on Oct.17.

Here’s a brief rundown of the changes and how they might potentially affect your mortgage borrowing now or in the future.

• Change # 1 – A new stress test is now required for all insured mortgages – less than 20 per cent equity – regardless of the term or whether is it a fixed or variable rate mortgage. You must now qualify at the Bank of Canada rate which today is 4.64 per cent.
   
• Change # 2 – Restricted insurance for low ratio or conventional mortgages. This means that many lenders will require the above insured mortgage stress test even for a conventional mortgage.
• This change could also potentially limit the choices available for consumers and we may see increased interest rates for some products as a result.
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• Change # 3 – New reporting requirements for the sale of primary residences to the CRA regarding the capital gains exemption. Everyone who sells a home will now be required to report the sale on their tax return.
• This move was made to prevent foreign buyers from selling a home in Canada without paying capital gains tax but it could also affect those selling a cottage or changing their current principal residence into a rental property.

Mortgages are complicated and now more than ever you should be seeking the services of a mortgage broker who works in your best interests and will guide you to the best mortgage lender for your needs.

This is a good time to remind you of how a mortgage broker can assist you.

I work with Canada’s leading financial institutions including banks, trust companies, and credit unions. They include Scotiabank, TD Canada Trust, National Bank, and many others.

 Did you know that you can only access many of the largest mortgage companies in Canada by working with a mortgage broker?

Many of these lenders have the most favourable terms available and most important today more than ever given these recent changes, options.

I also have lenders available that specialize in providing mortgages for clients who are self-employed, contract employees, have seasonal income, have trouble proving income, or lack some of the standard documentation.

I am an expert in negotiating the best rates for all Canadians, but understand that sometimes you may have challenges in your past that I can work through with you, to get you back on track.

Often clients make the time consuming mistake of going to multiple lenders themselves, attempting to negotiate the best rate.

Each time a financial institution pulls your credit report, your credit score actually drops. Sometimes the very exercise of trying to find the most competitive mortgage rate on your own actually disqualifies you from qualifying at all, or forces you into accepting higher interest rates.

I only pull a single credit report. I then send that report to my lenders electronically eliminating multiple inquiries. You deal with me directly through the entire process, from our very first conversation right until the mortgage process and funding is complete.

I am also there after funding to manage your mortgage ensuring that you are paying the lowest overall cost on your mortgage going forward.

If you have questions about how these new mortgage rules might affect you please give me a call at 888-561-2679 or email [email protected].

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.