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Mortgages and qualifying have changed immensely over the last couple years and with those changes, has come some confusion and misinformation.  While I generally don’t like to get real specific about the rules and guidelines because there is so much more to an application than the basic rules.  (and that’s what I help you with so you don’t have to figure it out on your own)

Due to some recent calls with some very misguided borrowers, that were about to pay too much for their mortgage or being overly restricted on their approval, I have written this post with the hope to help clarify as best as possible.  But, rather than trying to qualify yourself, I encourage you to reach out to me.  I am here to help you.

Borrowers purchasing with less than 20% down payment;

These are a High-Ratio Insured Mortgages.

(Mortgage Insurer options are; CMHC, Genworth or Canada Guaranty)

  • Stress Test rule was implemented in Oct 2016, applies to all lenders across the board, everyone must follow this
  • Must qualify based on Bank of Canada Benchmark rate, currently 5.14%*, and maximum of 25 year amortization
  • Can still secure great, low, competitive  contract rates
  • Property value must be less than $1 million
  • Purchase price of 500,000 requires down payment of 5% for first 500k and 10% for amount over 500k

 Borrowers purchasing with 20% down payment or more;

Can fall under one of the two following categories;

 1.  Qualifying as Insurable Conventional;

  • Stress Test rule implemented Jan 1 2018
  • Must qualify at Bank of Canada Benchmark rate – currently 5.14%*
  • Property value must be less than $1 million
  • Maximum amortization of 25 years
  • No Insurance premium paid by client

Contract interest rates for Insurable Conventional borrowers are generally lower than the following category;

2.  Qualifying as Uninsurable Conventional;

  • Stress Test rule implemented Jan 1 2018
  • Must qualify at Bank of Canada Benchmark rate currently 5.14%* OR the contract rate + 2%, whichever is greater
  • No Property Value limits  (just internal lender guidelines for sliding scale)
  • Amortization can go up to 30 years
  • Refinances fall under this category as well

Things to note:

  • Borrowers can save money and often secure a lower rate with the Insurable mortgage over an Uninsurable mortgage – this product is NOT available with the banks and some other lenders.
  • You should NOT be paying the higher qualification rate if you have good credit and documented income. 
  • Credit Unions do not have to follow the Jan 1st , 2018 stress test rules applicable to borrowers with 20% down payment or more.  But many have now implemented them. 
  • There are also some CU’s who have not implemented the Jan 2018 stress test, but they also generally only offer the higher posted rates and not discount rates, with a max 25 year AM – so there is typically no benefit to the borrower, they are being qualified on the higher rate anyway.
  • All Credit Unions, Banks and Lenders have to follow the Oct 2016 stress test for Insured mortgages; less than 20% down. 

If you are buying, refinancing or up for renewal, you don't have to figure it out on your own. Please don't assume you don't qualify and don't assume your lender is your best option. 

You have choices. Mortgages are not created equal.

I am here to help you. Book your free consultation today, taya@mortgagegrp.com

~ Taya Weiszhaar

p.s.  I work for you, not the lender at no charge to you (o.a.c.) ...more misinformation that needs clarifying : )

*this is the annual percentage rate for qualification