VICTORIA REAL ESTATE NEWS-ON APRIL 19th MORTGAGE QUAFICATION RULES CHANGE
The Federal Government is changing the Rules for home Buyers Qualifying for a New first Mortgage in Canada.
Effective April 19th, all new mortgage applications must be qualified with a 5 year term mortgage, some at the 5 year discounted interest rate and others at the higher Bank Posted Mortgage interest Rates which will be set weekly by the Bank of Canada which are about 2% higher...so who get which mortgage interest rate and How do you Qualify after April 19th for a Mortgage in Victoria?
So I called a well known Mortgage Broker Desiree Palfrey for her explanation of the changes for New mortgage Applications..... be sure to call Desiree if you have any questions about applying for a mortgage before or after the New mortgage qualification rules Apply.
Here is Desiree's response to me....
Hi Fred,
Rules for financing will be changing effective April 19, 2010. some lenders have already chosen to start using the new guidelines now. The changes are as follows:
- Clients who take a Variable rate mortgage or a fixed term less than 5 years must qualify using the 5 year posted rate as determined by the Bank of Canada each Monday. If the client chooses to take a 5 year fixed term then the 5 year contract rate can be used (ie. If it's a discounted rate, that's ok).
- For people who want to refinance their mortgage the maximum amount they can borrow is up to 90% of the current appraised value of their home (was 95%).
- For people who purchase a rental property the maximum amount of financing allowed is 80% (was 95%).
To clarify, the rate the client actually receives may still be discounted, it's just the rate used to make sure that they qualify is the posted 5 year fixed rate. It will make a difference for those that are pre-approved to their maximum right now. If you have anyone that was pre-approved recently, or is unsure of what they will qualify for now, it is a good idea to have them talk with their lender again now to make sure they are looking in the price range that they now qualify for.
So the good news is that if the client wishes to take a 5 year fixed term nothing will change because we can use the discounted rate to qualify them. And it's not an issue for those taking a Variable mortgage if they qualify for what they are buying anyway.
Hope that helps to clarify!
Desiree Palfrey
Mortgage Broker Verico Paragon Mortgage Group
Tel: 250.213.3691 Fax: 250.483.1578
www.desireepalfrey.com
HAVE YOUR BEST YEAR EVER IN 2010 !
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Fred Carver
Re/Max Camosun-Oak Bay
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