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What Do the New Mortgage Rules Mean for You? An FAQ Session.
| Blogs for Buyers
As you’ve most likely heard, last week an announcement was made regarding a change to mortgage rules nationwide (known as the B-20 Guidelines). The purpose of these changes is to stabilize the market, with a long term goal of managing long term debt by ensuring that buyers don’t over extend themselves when making a home purchase. We’ve been answering a ton of questions lately from our clients, so we put together this helpful FAQ to help you gain a better understanding of what’s to come. If there’s anything we’ve missed, feel free to contact us!
In summary – what’s going to happen?
Earlier this year, the mortgage rules were changed so that anyone putting less than 20% down on their home purchase was subjected to a Stress Test. This now applies for buyers putting down 20% or more as well.
What is a Stress Test?
Think of it as “rainy day” planning. The purpose of a Stress Test is to determine whether or not as a borrower, you can afford to pay back your mortgage if the circumstances were to change – essentially if the interest rates were to rise. As a purchaser, you are tested against whichever is higher: either the 5-year benchmark rate published by the Bank of Canada, or 2% higher than your contracted mortgage rate.
When do these changes take effect?
Lenders have until January 1st, 2018 to officially enact the new rules.
I’m looking to buy, what does this mean for me?
Your buying power will be reduced by about 20%, so if you take whatever you can afford and reduce it by that amount, you’ve got your new budget for a home. An excellent scenario from an October 17th Globe and Mail article illustrates a real-life example perfectly:
“A family qualifies for a 3.09% mortgage. That rate, plus 2 percentage points is higher than the Bank of Canada’s 4.89% five-year benchmark. The family would then be vetted using a 5.09% rate.
Under the current rules, they would be able to buy a home worth $706,692 with a 20% down payment. With the new guidelines, they would be able to afford a home worth $559,896.”
What will happen to the market overall?
The prediction is that luxury priced properties will see the least amount of change, while properties priced under $1 million will see more of a change. Since houses are generally more expensive than condos (for the most part), we can expect to see an increase in demand for larger condos and condos that can act as a family house alternative. Condo developers are already being encouraged to incorporate family-friendly amenities and layouts into their projects, so either way, we’re destined to see a shift in how the “family” norm for housing is defined.
Do you want to connect with our kick-ass in-house mortgage broker to see how these changes will affect your borrowing power? Click here to get in touch!
I’ve met Christine several years ago as I rented her condo. I quickly realized then that she was very professional, organized and committed to making it right – It just made sense to work her when we decided to buy our own place. Since then we completed 7 real estate transactions with Christine and her Team – buying, selling and leasing and the process is always flawless. From prep to list to referrals and after deal services, we couldn’t ask for a better Team to work with. Thank you!!
Worked with Tara and the team to have an investment property leased out. Off the bat, I communicated to the team what my goals were and what my ideal outcome was. The team was able to achieve of my ideal scenario! The results were amazing but more than that, you get a full service approach […]
Tara, with the entire Christine Cowern Team, made our long-distance purchase of our downtown condo as painless as possible. We ran into a number of bumps on the road but Tara and the team ensured that we made it all the way through viewing, offers and possession by, for example, finding us a new lawyer when […]
My work schedule involves traveling often so I needed someone to handle the sale of my rental condo smoothly. Christine was the perfect choice. Christine took care of all the details, including ongoing communication with the tenants to ensure showings went off without a hitch, and kept me informed the whole way. I am very pleased with the sale (we received multiple offers and sold the unit for over the asking price in less than a week) and will be recommending Christine to everyone! Thank You Christine!
Brilliant. Honest. Efficient. It was like handing over the keys of our house, and then having Christine take over and run the show for us. Communicated late into the night (because we asked for it), through text, IMs, emails, phone…Follows the simple principle of over-communicating, so that over-zealous sellers like us are kept happy!! In […]
Catherine is the best person you could ever have when looking for a property. To date she has found me a place to live not once but twice. Both times I was completely happy with what she found for me. She worked tirelessly to find my perfect home & would always be honest when showing any property. She […]
Christine and her team were amazing. We worked with another agent before we found her, and sat biting our fingernails through four months of inaction. Then Christine came in, and within 8 days of listing, we signed back an offer that was eventually to sell our home by day 13. But beyond the great work […]
Meeting Christine was like a breath of fresh air for us when we were looking for our first home 6 years ago. Christine was very professional, always on time and she would pay close attention to all our requests. We loved working with her. We definitely recommend buying or selling your house with her team […]
We’ve worked with Christine on three transactions in the last couple of years and found Christine to be responsive, personable and very proficient at getting the job done in our best interest. What really impresses us is that even after the transactions are over (couple of years later), she’s still very responsive to any questions […]
We are very happy we chose to work with the Christine Cowern Team! We still can’t believe we were able to purchase our dream home in this crazy Toronto market. Although the process of purchasing a home in such a market can definitely be a daunting task, Christine and her team were there for us every step of the way and listened to our needs.
Great experience from start to finish with the Christine Cowern Team. I would highly recommend their services to anyone selling their home. The staging consultation and rearrangement of my home decor I believe was key in getting a higher return on my investment. I was concerned that being overseas during the listing of my condo […]
This is the second time that my wife and I have worked with Tara to buy/sell our home. The approach that she followed as part of the Christine Cowern team was ideal for my wife and I, professional. The first thing she did was listen to what we needed and what we wanted. Then she […]
My wife and I have used Christine and her team to list and help us buy twice since 2013 (sold two properties, and bought two properties within that time), and she and her team are simply amazing. Not only are they absolute sharks in the market who will get you what you want for your […]
Chad was our wonderful agent. He knew the market well, was happy to answer our numerous silly questions at all sorts of hours (sometimes responding to us as early as sunrise to late into the evening), and he was always punctual despite Toronto traffic which really adds to his professionalism.
I was so happy with all the effort, I used Christine’s team for the purchase of my new home too, again they went above and beyond ensuring I make the right choice for my needs without any pressure from their side. And I have to say I’m was again so pleased to have them on my side.
Catherine Goguen is, truly, the most amiable, professional, energetic realtor I’ve ever worked with – a pleasure to do business with. I felt extremely confident that she was looking after my best interests at each and every step of the process proactively – beyond my own knowledge and my expectations, and without me asking. To […]
This was our first time selling a house and I feel very lucky that we happened upon Christine who was so kind and helpful. Christine put us in touch with Tara and Julia. Tara helped us sell our house. She was awesome, never pushy, always understanding, knowledgeable, accessible, and patient with us as we struggled […]
Christine and her team of real estate professionals were instrumental in getting our Mothers home sold. Bottom line, Christine is a problem solver. Having said that, she is also compassionate, trustworthy and understanding. She always kept our families best interest at heart and acted with professional integrity and every stage of the sale.
The Christine Cowern Team is the best real estate team in the GTA! Catherine was exceptional from her response time, to experience in closing our deal. We would highly recommend this team to all our family and friends! Their network of resources and knowledge in the industry create a stress free experience.
We dealt with Christine for the purchase of our new home and also the purchase of our second. She is amazing to work with. We couldn’t be happier. We have also used the services of her team and identifying vetted contractors. I can’t recommend them enough. 😀
We had a fantastic experience working with Christine and her team. We ended up finding exactly what we were looking for, and it was their patience, persistence and professionalism that got us there. Highly recommend Christine!!!
If you want the best in the business, get The Christine Cowern Team. Christine’s knowledge, natural charm and professionalism got me the results I was looking for in the process of buying and selling my property(s). Her expertise and dedication sets her apart from the rest. When my questions and concerns were immediately answered, I […]
Christine Cowern And Tara Crooks, thank you, thank you, thank you for making the whole process of purchasing my dream apartment so easy. Tara Crooks was amazing throughout the entire process. Word of mouth is the best advertisement, I assure you I’m telling everyone of my positive experience with your team.
On the selling side, Christine helped us to market and sell our place on short notice and really pulled out all the stops. She worked hard and got us the best deal and met our quick closing date. Throughout it all, she was extremely professional and seemed to really care about us as clients. I highly recommend Christine and her team!
In a word, WOW! Christine and team definitely care and put the work and attention in to every single detail to deliver the sale (a rather complicated assignment sale at that)! I could not of been more impressed and it was a true pleasure to work with Christine – she had my back and made […]
We were beyond happy with our selling and buying experience with the Christine Cowern Team! Both Christine and Tanya are so knowledgeable, organized, and responsive to any questions or concerns you might have about the process. You really feel like you’re getting a team service when you list and buy with them. They will try […]
It was such a fun, exciting and stress-free experience working with Christine and Chad! From beginning to end, they were so great as they took the time to understand our needs so they could make great recommendations since we were new to the city. We were also incredibly impressed with entire support team, including Lori […]
Tara has been so great to us over the past few years offering advice, hours of searching/showings and doing everything possible in the dreaded buyers bidding war! Looking forward to working with the whole team again!
*Zero stress and Record Selling Price* Christine and her team (Tara) are the best in the business, in my opinion. From reviewing the market for a period of time before Listing my property, to the process of collaboration on how to best showcase my home and establishment of the right price when going to Market, […]