If you are thinking of buying a house with a mortgage, get pre-approved for your financing before starting the process
Why? because under the new lending rules, you may find that you can’t afford as much house as you were before.
in the last years, the government of Canada has been increasing the rules to make it more difficult for homebuyers to finance a home: The interest rates have been going up and the required income to get a mortgage is much higher.
The new rule, starting January 1, 2018, is for anyone wanting to buy a house putting 20 percent or more down (uninsured mortgages), as they will be required to pass something called the “stress test”.
Under this new rule, buyers would be approved for their mortgage in a process in which the banks would simulate that the interest rate that they are lending the money to is much higher than the real rate. All of this to prove the home buyers could afford a big change in the economy or an increase in bank rates.
This will reduce the amount of house a prospective buyer will be able to purchase significantly.
About 46 percent of mortgages in Canada are uninsured, in other words, lots of buyers have purchased their homes with a 20 percent or more down payment, according to DBRS.
Contact us for more information. WE CAN REFER YOU TO A MORTGAGE BROKER TO GET YOUR MORTGAGE PRE-APPROVED BEFORE THIS CHANGE HAPPENS.
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