On October 17, all mortgage loans, regardless of the term, will have to be limited to 4.64%. What for? The government wants to allow loans that customers could afford at a rate of 4.64% even if they pay only 2.39% for the mortgage at the moment. “For example, my client with a down payment of 10% was tentatively approved for a 5-year fixed rate of 2.39% for a mortgage amount of 400,000. But for a new change, the same client will keep the rate of 2.39%, but can only claim at 320000, based on a rate of 4.64%. This is a 20% reduction in the amount that he can afford under the new rules! Before the change, the client could claim an approved rate of 2.39% for a 5-year fixed term comments on the changes in the rules Realtor in Vancouver Anna Gamova.
The terms 1-4 years with a variable rate were always limited to 4.64%, and now it also extends to a 5-year term, which most buyers take with an initial contribution of less than 20%. Customers who have already signed a fixed mortgage approval agreement before October 17 are exempt from this, provided that the date of completion of the purchase transaction takes place before March 1, 2017. They will still have to pay insurance premiums that have not changed. Depreciation over 25 years remains valid.
What to do? If you accepted the offer from the bank for a mortgage, then make sure that the deadline for confirmation of your mortgage loan is before October 17. If you are still looking for a loan, then try to sign an agreement with the bank before October 17, so that you can apply for a loan at current rates. You will need to submit a mortgage confirmation before this date. This is Monday, so it’s worth it until Friday, October 14th If you understand that you do not have time to sign the agreement before October 17, then call the mortgage broker and find out what you can claim in connection with the new changes. Take into account that there are different situations and new changes may not affect some buyers, depending on their income, etc. Therefore, please consult an experienced mortgage specialist. The changes will be introduced on November 30th.
Explanations are still awaited (there was no clear announcement), but there is an assumption that a similar rule will be introduced from 4.64%. They also talk about the elimination of the 30 and 35-year period of depreciation with the establishment of a limit of 25 years, which will significantly reduce the amount to which the buyer can claim. Realize minimum credit score. It is said that these rules will apply only to owner-occupied property, and not to rental or investment property. These changes may affect some lenders based on how they pay for insurance. We will publish accurate information when something becomes known.
What to do? If you accept the offer, then make sure that the deadline for confirmation of your mortgage loan is before November 30 (if you have a 20% deposit or more for the purchase). If you understand that you do not have time to sign the agreement before November 30, then call the mortgage broker and find out how much you can claim on the basis of the new change.