Mortgage Stress Test in Nova Scotia

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New rules came into effect on January 1st 2018 that affect Canadians' ability to get a mortgage, and for what amount. These rules are not limited to people looking to purchase a home with a mortgage, but also apply to those looking to refinance a home. 

Stress Test: 

The most notable change was the introduction of a "stress test" rule for all new mortgages. This drastically affected borrowers' ability to qualify for a mortgage, and for how much. It means that a borrower has to qualify for a higher rate than they are actually getting on their mortgage, in an effort to protect borrowers from a crisis should rates rise. The Bank of Canada sets a "5 year benchmark rate". In order to qualify for a mortgage under the new rules, a borrower must qualify for a mortgage at the greater of the 5 year benchmark rate, or the current rate on the mortgage plus 2%. (So if you are getting a 3% mortgage, you have to qualify for a 5% mortgage.) This affects the amount the borrower is approved for. The estimate is that on average it will be 20% less than if they had been approved under the current rules.  

Moving Forward: 

There are a lot of things to consider when you decide to buy a home, sometimes it can be overwhelming.  If you have any questions about making this decision we offer a flat fee consultation service. You can come to chat and ask questions. We'll give you some advice about your options and what your next steps might be. There is no commitment after the consult. If you have decided to go ahead, and wish to retain us we would love to work with you. You can find our information at: highlanderlaw.ca. 

Back up links:

https://www.canadianmortgageco.com/mortgage-planning/mortgage-stress-test/

https://www.superbrokers.ca/library/benchmark-rate.phtm

If you have any questions about mortgages you can call us at (902) 826-3070 or email us at info@highlanderlaw.ca to set up a meeting with one of our lawyers at our Tantallon law firm. You can also schedule a no commitment Issue Review Consult for $250+HST where you have the opportunity to explain your situation to a lawyer and get basic advice before deciding whether or not you'd like to retain us.  

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