Bruce Peninsula Real Estate

The Office of the Superintendent of Financial Institutions (OSFI) has new rules for mortgages which took effect as of January 1st, 2018

OSFI has set a new minimum qualifying rate, or “stress test,” for uninsured mortgages.

To start off there are two types of mortgage buyers: those who have at least 20% of the purchase as a down payment, and others who don't and need to get an insured mortgage through an organization like the CMHC (Canada Mortgage and Housing Corporation).

If you don't have the 20% down payment, you will have to qualify for mortgage insurance

The new rules or “stress test” means that financial institutions will need you to qualify your mortgage by using a minimum rate equal to the greater of the Bank of Canada’s five-year benchmark rate (currently 4.99% on date published, Jan 9 2018) or their contractual rate plus two percentage points.

As a first-time homebuyer if you don’t pass the new stress test, you have three options:

  • You can either put more money on to the down payment to pass the stress test
  • You can decide not to purchase now and continue to save money
  • You can add a co-signer onto the loan

The changes not only affect first time home buyer, but it will also affect home owners who renew their mortgages. The new rules won’t be applied it you renew with the institution that you are currently at but if you want to look around for better rate the new rule will apply. Also, if you are refinancing or looking to borrow new money you will need to pass the stress test.

If you have any questions about buying or selling on the Bruce Peninsula, please contact your Bruce Peninsula Real Estate Team, RE/MAX Grey Bruce Realty Inc, we service from Owen Sound to Tobermory Including Wiarton, Sauble Beach and Lions Head.