Before only those with less than 20% downpayment had to undergo a mortgage “stress test”. New rules will be implemented Jan 2018 for all borrowers for those with 20% downpayment or more.
The “Stress Test” means that you need to qualify for either the five-year average posted rate (currently at 4.89%) or 2% higher than your actual mortgage rate, whichever is higher.
What this means is that if the Bank qualifies you for a mortgage amount based on 2.79%, you will have to qualify for a mortgage payment calculated at 4.89% even if your mortgage payment is actually at 2.79%. This will impact significantly how much the bank/lender will allow you to purchase.
The stress test won’t apply to existing mortgage renewals as long as you stay with your existing lender.
For those of you thinking of buying a rental property with more than 20% downpayment, you should ACT NOW before Jan 2018 to increase your changes of approval.
For those of you thinking of selling your Condo or Townhouse and upsizing to a House, you should ACT NOW before Jan 2018 to be approved for a higher purchase.