Canada’s New Mortgage Rules 2018

[TimLacroix]

Mortgage rules are changing effective January 1st, 2018. Many Albertans (Canadians) will be effected by the change. These changes impact the qualifying for purchases with more than 20% down payment and clients who are looking to refinance. If you are unsure if it impacts you, please reach for a free no obligation call or meeting.

These rules have been in place since Oct 2016 for purchases with less than 20% down payment.

If you have questions, do not hesitate to contact me! [email protected]

https://timlacroix.com/canada-new-mortgage-rules-2018/

[roopi]

Is this statement on your website accurate? A $100,000 salary would really qualify for that?

Let’s take a household annual income of $100,000 with a 20% down payment and a 5-year fixed mortgage rate at 3.09%. *Assuming amortization of 25-years, monthly heating costs of $150 and monthly property taxes of $300. Qualifying at the current contractual rate (3.09%), a buyer would qualify for a $755,000 purchase.

[TimLacroix]

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Is this statement on your website accurate? A $100,000 salary would really qualify for that?

Looks like a small typo... the purchase would be more like $740,000 - $745,000 with 25 year amortization. But would able to qualify at $755,000 with 30 year amortization. Keep in mind that this does not take into account any existing liabilities (debts).

[Feruk]

$100k in salary qualifies you for $755k property? Lol, no wonder we're now the most indebted country in the world.

[TimLacroix]

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$100k in salary qualifies you for $755k property? Lol, no wonder we're now the most indebted country in the world.

The percentage of people that I find that max out their budget is low. The numbers are an illustration of the the potential impact to purchase power based on the new rules.

But your comment are fair. I think the main reason why our country is indebted... is not necessarily mortgage debt but more related to personal debt. I believe that there should be some focus on how easy it is to get unsecured debt (car loans, credit cards,etc)... which is in my opinion the main cause of Canada's debt issues.

[Power_Of_Rotary]

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$100k in salary qualifies you for $755k property? Lol, no wonder we're now the most indebted country in the world.

Household income of 100k.

[Xtrema]

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$100k in salary qualifies you for $755k property? Lol, no wonder we're now the most indebted country in the world.

That could be 2 $50K income, so take home is about $80K+

With 20% down, you are servicing $600K mortgage, so around $3K/mth, which is about 45% of take home. Could do it but probably should not.

Lenders are about what could you get, not what should you get.

[Team_Mclaren]

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$100k in salary qualifies you for $755k property? Lol, no wonder we're now the most indebted country in the world.

Thats based on zero debt other than mortgage afaik. With no car payments and other debts i dont see why not?!

[nzwasp]

I wonder how long it will take to see an effect of these new changes to the housing markets in vancouver and toronto. Is it usually a year or so before results are seen?

[Diocletian]

That will be interesting. By all accounts Toronto and Van should be hit to some degree by the new rules, however with foreign money flowing in, we may not get what we expect.

[RealJimmyJames]

This hits average working stiffs not the overseas millionaires in Vancouver or the one percenters that hang out on beyond.

[Xtrema]

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This hits average working stiffs not the overseas millionaires in Vancouver or the one percenters that hang out on beyond.

It also hit middle upper flippers by reducing their ability to get too many loans.

But yeah, if you have access to capital, play on.

If house prices doesn't go down soon, I'm sure they will increase CMHC premium next and require CMHC insurance unless you have 50% down.

[nzwasp]

How does this affect people trying to buy up even more rental properties?

[ercchry]

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How does this affect people trying to buy up even more rental properties?

Same 20% cut to buying power... if you’re looking to do something soon, get your preapproval done before the end of the month, good for 120 days with old rules as long as no changes are made to the app

[nzwasp]

Im just thinking of some friends of mine who have like 30 properties and how they would manage to add more - must be special rules for some of them

[ercchry]

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Im just thinking of some friends of mine who have like 30 properties and how they would manage to add more - must be special rules for some of them

Really comes down to the numbers... some lenders do 80% rental offsets, always private lenders too, credit unions are provincially regulated and not federally.. so they don’t have to actually follow these rules... although ATB chooses to

[shakalaka]

Edit: Ah i see, I read the link closely. So from what I understand, buyers with more than 20% down currently with a household income of $100K qualify for up to $750K mortgage, while starting January they would only qualify for $616K correct? So basically making it more difficult to afford starting January?

[ercchry]

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Edit: Ah i see, I read the link closely. So from what I understand, buyers with more than 20% down currently with a household income of $100K qualify for up to $750K mortgage, while starting January they would only qualify for $616K correct? So basically making it more difficult to afford starting January?

Making it more difficult to qualify...

It’s a strange system... if you say the average person has a vehicle payment, the debt ratios including that payment will make qualifying even more difficult... but if one was to sell their car... get a mortgage, the actual monthly debt ratio after qualifying would leave enough room to add that vehicle payment back in and the debt ratios would be the same as they were before this whole benchmark thing started... if that makes sense?

If anything these changes makes a good broker even more valuable to people trying to get approved, so many facets to lending now depending on employee/contractor, amount of down payment, and even purchase price