Additional Mortgage Rule Changes
As you may have heard, there were a few more CMHC changes this week in respect to the mortgage qualifying. These changes are effective April 19th.
All borrowers choosing a fixed rate mortgage with a term of less than 5 years and any borrower choosing any variable rate mortgage product will have to qualify on a 5 year fixed mortgage rate.
The 5 year rate that the lenders must use in establishing affordability is the BANK of CANADA's 5 Year standardized rate which currently sits at 5.49%. This rate will be posted weekly by the Bank of Canada.
The government has lowered the maximum amount Canadians can withdraw when refinancing their mortgages from 95 to 90 per cent.
We now also have been told that CMHC will only allow a 50% addback on rental property income and no longer allow the 80% direct offset that is currently allowed. This will affect clients who want to move to a new home and keep the current residence as a revenue property.
The current CMHC "Self Employed Stated Income" program is now only eligible for clients whose self employed tenure is less than 3 years.
These changes are in additional to those previously announced. They are aimed at preventing issues for borrowers once interest rates rise over the coming years. Should you have any questions regarding financing for your new home please contact me and I will either answer your questions or direct you to the right experts to do so.
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