How The Mortgage Stress Test Has Affected Home Buyers
So far, 2018 hasn't been the most lucrative for mortgage seekers and home buyers. The introduction of the stress test and new mortgage rules on January 1 affects most new homebuyers and owners who are contemplating renewing or refinancing their mortgage.
The new legislation states that even buyers with a 20% or higher down payment must undergo a “stress test.” This means that they must be able to meet a minimum qualifying rate equal to the greater of the Bank of Canada’s five-year benchmark rate (currently 4.99%) or their contractual rate plus 2%. In other words, you need to have more money to buy a home than in previous years!
One of the most significant disadvantages of this new legislation is that many buyers will have to increase their downpayment for a home to an unrealistic or unattainable amount. Hard working buyers who have saved up for years still might not be able to qualify for a mortgage under the new rules.
While the benefits of the new legislation revolved around unqualified home buyers not being approved for a mortgage they cannot afford, the real estate industry enjoys a few advantages too. The instruction of the stress test has freed up properties to buyers who have a higher down payment and possess the means of paying their mortgage over those who might purchase a property beyond their means and potentially default on their mortgage.
If you’re in the market for a new home, you can take advantage of this new legislation by reaching out to the Jordan Grosman Group. We can help you overcome the obstacles that currently exist by seeking out and showing you amazing properties that are within your budget. By ensuring you see only properties that you will qualify for, you avoid the risk of frustration and eradicate the possibility of falling into a debt trap and defaulting on a mortgage.
As experts in Toronto luxury real estate, our team of real estate agents offer a complete suite of real estate services and deliver exceptional client experiences in buying or selling homes across Toronto. We have more than fifteen years of experience and pride ourselves on helping you understand the market, matching your needs and budget with a property and skillfully guiding you from the beginning to end of your real estate journey.
If you have any questions about the Jordan Grosman Group or how we can help you, please contact us by clicking here. To learn more about why we are the best at what we do, please visit our website by clicking here.