Christine Buemann Mortgage Broker

The Bank of Canada has increased their Qualifying Rate to 4.99%. If you are purchasing a home soon, or planning to refinance make sure to check with your Mortgage Broker to see how this change will impact you. www.christinebuemann.ca

What is the Qualifying Rate? The Bank of Canada's Qualifying Rate (also called the Benchmark Rate) is a weighted average of the Big 6 bank's 5 year posted rate. This rate is used to essentially "stress test" in mortgage qualification to ensure borrowers can afford higher payments should their actual interest rate increase. If you are getting an insured mortgage in Canada, meaning putting less than 20% down, you will have to qualify based on this rate. It is important to note that this is not the actual interest rate that you will be paying. This rate is also used to qualify terms shorter than 5 years as well as variable rate mortgages, for those putting more than 20% down. After January 2018, borrowers with more than 20% will be qualified using the greater of this rate, or their actual rate +2%. www.christinebuemann.ca  

The Government has just released the final version of Guideline B-20 . The most significant change that they have added is the "stress test' to uninsured mortgages. What is an uninsured mortgage? One where there is no default insurance secured to the mortgage. If you are putting less than 20% down, your mortgage currently has to be insured through CMHC, Genworth or Canada Guaranty. What most consumers don't realize is that even when putting more than 20% down, many lenders have still been obtaining this default insurance, they just cover the cost it. This is called portfolio insurance and it essentially allows lenders to finance mortgages with lower interest rates to the consumer . As of last year's set of rule changes, the following types of mortgages can no longer be insured: Refinances Rental properties Properties valued over $1M Mortgages with longer than 25 year amortizations Mortgages with 20% down where the contract rate is required to qualify

If you are buying a house with a purchase price over $500k, there are a few things to remember: Y our minimum down payment will increase . You will be required to pay 5% on the first $500k and then 10% on any amount over the $500k. Here is a link to CMHC which explains the down payment as well as a few other general requirements I f you are purchasing in Northern BC, in that price range you will likely be looking at newly built homes. There is a transfer tax exemption for new construction (up to $750k, with potential partial exemptions up to $800k) which is worth exploring when considering several different home purchases. Property transfer tax is typically 1% on the first $200k and 2% on the remainder.    If you are a first time buyer, the transfer tax exemption is only applicable up to $500k (with partial exemptions up to $550k) so you will want to confirm whether you can qualify for this exemption  For more information on these programs or for any mortgage quest

Who:  The Bank of Canada  What:  Qualifying Rate - This rate is a weighted average of the big 5 bank's 5 year posted rates.  It is used to qualify all insured mortgages as well as variable rate mortgages or those with terms shorter than 5 years.  It is not the actual interest rate that the client will receive, simply a rate used for qualifying. Why:  It is essentially a "stress test" to ensure borrowers can afford an increase in payments, should rates go up. When:  Effective immediately. It is important to note that some lenders may honor the old qualifying rate for pre-approvals however  most will require borrowers to qualify at the new, higher rate. If you are pre-approved and currently shopping for a new home, it is important that you consult with your Mortgage Broker to ensure their maximum mortgage amount has not changed. For any questions, please feel free to contact me. Have a great day! www.christinebuemann.ca