Team Keogh is here to share some great news for Canadian homeowners! As of November 2024, there's a significant change in mortgage rules that could save you money. You can now transfer your existing mortgage to a different lender without having to pass the mortgage stress test! This new rule opens up opportunities for homeowners to shop around for better rates and potentially save thousands of dollars.
Understanding the Mortgage Stress Test:
Since 2018, anyone applying for a mortgage in Canada has been required to pass a mortgage stress test. This test ensures that borrowers can qualify at a higher interest rate than their payment is based on, acting as a safety net in case rates increase. The stress test involves qualifying at either the benchmark rate plus 2%, or your interest rate plus 2%, whichever is higher.
For example, in 2023, many fixed rates were around 6%. With the stress test, you would have to qualify at 8%.This meant that a couple with a combined income of $150,000 might qualify for a maximum mortgage of $600,000, compared to $800,000 when rates were lower, illustrating how the stress test can reduce borrowing power.
The New Mortgage Transfer Rule:
•The new rule allows you to transfer your existing mortgage on your property to another lender without having to go through the stress test.
•This change creates competition between lenders, as homeowners are no longer "held hostage" by their current lender and can shop around for the best rates.
•The ability to switch to a new bank can lead to better rates, saving homeowners money.
Benefits of the Change:
•Homeowners can now access more competitive interest rates.
•This change can potentially put more money in your pocket.
•The new rule provides flexibility and the ability to shop around, ensuring you get the best deal available.
This update is a great opportunity for homeowners to review their mortgages and take advantage of potentially lower rates. If you have any questions or want to discuss your mortgage options, please reach out to us!
Contact us for more information on how you can benefit from this new mortgage rule and other real estate advice. Call, text, or email us today!
