Buying a home is a big step, and you have to make sure that you’ll be able to afford it, and that it’s the right investment for you. But now you also have to make sure that you know what the new mortgage rules are and how they will affect you. Whether you have mortgages in Oakville or anywhere else in Canada, you will be affected by the new rules.
The new proposed mortgage rules are aimed at decreasing homeowners’ debt. Canadians are said to spend around $3 for every $1 they earn, making it important to be responsible when it comes to making new debt. The rules will affect new and existing homeowners, so it’s important to familiarize yourself with all the rules and how it will affect you and your family.
The New Mortgage Rules
In short, you can still buy a home with only a five percent down payment, but you can no longer pay it off over 35 years. You now have to pay it off in 30 years or less. This shouldn’t be a deal breaker for most homeowners, but it’s something you should be aware of. The biggest advantage of having had the option of repaying your mortgage over 35 years is that your installments are smaller.
Existing homeowners who now want to refinance their home might find it a little harder. With the new rules in place, you can only take up to 85 percent of the value of your home, where the previous limit was 90 percent. Existing homeowners can also refinance for a maximum of 30 years, instead of 35 years as it was previously.
These new rules are meant to help reduce the overall debt that homeowners have. Canadians are said to have a lot of debt, and it’s growing by the year – which is why it’s important to be aware of these new rules. It will also be harder to get a mortgage as you’ll have to show that you’ll be able to withstand an interest rate increase of up to two percent per year.
Many homeowners also want to purchase a second or third home, and it will be a bit more challenging to get approved unless you will be able to prove that you can withstand the possible increase in mortgage rates every year. This is to ensure that you have the funds available to provide for unforeseen expenses and that you do not put yourself in unnecessary debt.
At Mortgage Guys in Oakville we specialize in mortgages and we can help you to understand the new mortgage rules, especially if you are a first-time home buyer. Speak to our friendly team today.