New Qualification Rules for Mortgages

We met with mobile mortgage specialists from RBC this week to discuss how the recentconventional-versus-high-ratio-mortgage rule changes are affecting home buyers. Its not overly complex but the changes do have a significant impact on both buyers and the potentially the real estate market.

Lets run through a possible purchase scenario 

  • Buyer Client is a first time home buyer
  • They saved 5% for the down payment
  • $100,000 combined income
  • $800 a month for Loans, Car Payment, VISA Balance etc.

Subject Property they would like to purchase

  • Purchase Price $475,000
  • Property Taxes $5,000 / year
  • Heating and or other Expenses $1,200

 

2017 Qualification Rates for a 5 year fixed term – 3.19% 

  • Purchase Price $475,000
  • Purchase 5% Down Payment
  • 25 Year Amortization
  • Estimated Monthly Payment $2,221

** Total Debt Service Ratio =42%  equals mortgage APPROVAL  ** 

2018 Qualification Rates for a 5 year fixed term – 5.14% 

  • Purchase Price $475,000
  • Purchase 5% Down Payment
  • 25 Year Amortization
  • Estimated Monthly Payment $2,712

** Total Debt Service Ratio =48%  equals mortgage DECLINED  ** 

ADJUSTED QUALIFICATION *** 2018 Qualification Rates for a 5 year fixed term – 5.14% 

  • Purchase Price $400,000
  • Purchase 5% Down Payment
  • 25 Year Amortization
  • Estimated Monthly Payment $2,299

** Total Debt Service Ratio =43%  equals mortgage APPROVAL  **

Now more than ever it is so important to align yourself with and partner with industry professionals to help navigate you through all of your real estate options and the process of searching for and purchasing your new home. You may qualify for more than you think., You may have to adjust your search criteria, either way knowledge is truly a power full tool and a tremendous advantage in this current market place

Would like to thank Marlene Jobb, Ethan Jobb & Alexandra Jobb for presenting and  assembling the above numbers and scenarios. 

  • Marlene Jobb @ (905) 432-4310 marlene.jobb@RBC.com
  • Ethan Jobb @ (289) 927-3720 ethan.jobb@RBC.com
  • Alexandra Jobb @ (905) 995-2126 alexandra.jobb@RBC.com

Thank you

 

SCOTT ROY, Sales Representative

RE/MAX JAZZ Inc. Brokerage, 21 Drew Street, Oshawa ON

(905) 728-1600 Office or (905) 435-7355 Direct – scott@lifeindurham.com

 

New Down Payment Rules for Canadian Home Buyers

 

Saving for your down payment has just become a bit more difficult. With todays announcement from the Federal Government, it could make it a bit trickier to get into your first home.

The Federal Government has handed down new down payment rules Finance Minister Bill Morneau announced on December 11th there is a policy change regarding the new minimum down payment requirement, which will take effect on February 15, 2016.

You can read more details on the Canadian Mortgage Trends Website at CanadianMortgagetrends.com or click on the link for the article.

CMT Article

Here is a small sample of the article regarding how the changes affect the amount required and at what threshold the changes will affect the most.

For properties between $500,000 and $1 million, folks getting an insured mortgage will now need to put more down—up to an additional 2.5% of the purchase price. In other words, 5% down will be required on the first $500,000, and 10% down will be required on the next $500,000.

For a $750,000 property, that means you’d have to cough up a 33% bigger down payment (compared to today), or another $12,500. The new rule doesn’t affect properties over $1 million because they don’t qualify for high-ratio mortgage insurance anyway.

As always its good to have a team of professionals on your side when considering buying your first home or moving up in the market. With so many industry changes and hidden fees added to many processes in recent years, it is more important than ever to have the right people helping you avoid some of the hidden pitfalls. Make sure you have a well informed Mortgage Professional, Real Estate Agent and Residential Real Estate Lawyer on your side.

 

SCOTT ROY Sales Representative

RE/MAX JAZZ Inc. Brokerage – 21 Drew Street, Oshawa, ON

(905) 728-1600 Office or (905) 435-7355 Direct / Text

scott@lifeindurham.com