As you may have heard, the Bank of Canada recently made an announcement that is going to have a huge effect on mortgage qualifications. How will these changes impact your ability to get a mortgage in the future?
Effective October 17th, the loan amount that you qualify for will be approximately 20% less than what you would qualify for today. The good news is you will still be able to get approved and that your mortgage payments will still be calculated according to the current low rates.
Let’s look at the big picture. Currently, if you qualify for a $647,000 mortgage and you wait until after October 17th to make a firm offer on a home, the amount that you qualify for will decrease to $500,000. This price change could mean that you will not be able to move into your favorite neighborhood, or maybe that you’ll have to choose a smaller or older home to move into. The upside is that if interest rates increase, you’ll know that you will be able to afford your monthly payments.
Based on the numbers from last year, we estimate that one-third of the homes that were approved in the past year would not be approved in this coming year due to the new rule changes.
You absolutely have time to get into a new home before these changes take effect; however, you need to act fast. If you have any questions about these rules and how they affect you, or if you’re looking to get into a new home before they go into effect, give us a call or send us an email. We’d be happy to help you!