Buying A House In Ontario, Will I Be Approved For A Mortgage?

Buying A House In Ontario, Will I Be Approved For A Mortgage?

Are you buying a house in Ontario?  After the proposal by the Federal Government to change the mortgage qualifications for buyers, many people have been left scratching their heads wondering whether or not they will be approved.  Unfortunately due to the lack of information that has been coming down the pipe most people are unsure what these new guidelines will involve and it feels a bit like the government is making it up as they go..

This lack of information creates more questions than it answers.   Buyers are left wondering if I am buying a house in Ontario now should I buy now while I can still get approved for a better house in a better neighbourhood or will the housing prices go down and reflect the new affordability of the Canadian market?

In order to try and answer some of those questions, let’s consider what we know so far.

Latest Update On The New Mortgage Guidelines

Here Is What We Know For Sure:

1. The stress-test require low risk buyers must qualify for mortgage the greater of:
   1. 2 percent higher than the actual amount of their mortgage
   2. or 5 year posted Bank of Canada
2. The latest update will take effect January 1, 2018
3. The new mortgage guidelines and stress test rules will apply to mortgage renewals if the borrower changes financial institutions.
4. The new guidelines have been designed to prevent lenders from getting creative and trying to go around the rules, and so the guidelines also apply to co-lending or bundled mortgages.
5. The stress-test is designed to minimize the impact on financial lenders and mortgage defaults if interest rates rise.
6. The idea is to ensure borrowers can afford a rise in interest rates.
7. The purpose of the stress-test is to cool the market in anticipation of a rise in interest rates, however the markets have already experienced a cooling and are now at a more balanced market since the summer.

The Effect the Latest Update on Mortgage Guidelines Will Have On The Market:

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If you are buying a house in Ontario today, it is important to stay informed and consult a mortgage specialist.

If you are looking to sell a home, we buy houses.

The Trading Post Property Solutions Inc

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