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STRESS TEST REMOVED FOR MORTGAGE RENEWALS

Starting November 21, 2024, there are some major changes to the mortgage rules. The Office of the Superintendent of Financial Institutions (OSFI) is eliminating the stress test for uninsured mortgage renewals. This will allow borrowers to move to another lender at renewal time as long as it is the same mortgage amount and the amortization is not increasing and is continuing as per the original agreement


What is the Mortgage Stress Test?



The mortgage stress test is a way for lenders to check if you can afford the mortgage payments even when faced with potential interest rate increases. Typically, this test is required to demonstrate your ability to afford a rate that is up to 2% higher than the interest rate offered by the lender. To pass you will need a high enough income, low debt, and to be able to pay down your mortgage at a higher rate. In case you do not pass the stress test, we can explore various options together, such as securing a co-signer or seeking out an alternative B mortgage lender.

Example


Our client's mortgage renewal is coming up, and they want to reduce the monthly payments. Their current lender is offering a mortgage rate of 5.5%, and we were able to find a new lender that would offer 5%. Under the old rules, they might not have been able to qualify due to failing the stress test and would have had to stay with their current lender. Clients renewing their $500,000 mortgage could save $150 a month with their new lender.


Implications for Homeowners


Currently, borrowers are required to undergo the stress test when wanting to switch to new lenders. Being rejected due to the stress test meant that clients had to stay with their current bank and miss out on lower rates. Canadian homeowners with uninsured mortgages will greatly benefit from the change allowing you to have more mortgage options and save. Get ready to shop around for the best mortgage renewal offer, or work with the Browne Mortgage team who are knowledgeable about the top deals available to you! Contact us today to learn more about these changes and how they will impact your mortgage renewal. 


GETTING A MORTGAGE IS EASIER THAN YOU THINK

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