How The Mortgage Stress Test Could Affect You
Since the turn of the year, an increasing number of home buyers have been left frustrated by the reconstituted stress test required for obtaining a mortgage. Although the stress test was put in place a few years ago, only clients who were buying a new home but making a less than 20% down payment on the purchase price faced the stress test. However, as on January 1, 2018, anyone buying a home has to go through the stress test. Moreover, instead of qualifying you on the contract rate, we have to add 2% more which reduces your buying power.
As a professional, I understand that the government is trying to slow down the market which is not necessarily a bad thing. However, the problem is really for first time home buyers. Prices have sky-rocketed, and now first time home buyers can only afford a smaller mortgage, which is kind of a double whammy.
In addition, when qualifying for your mortgage, you are no longer buying at your limit, so in the event that the rates do go up, you should still be able to afford your mortgage. This principle reduces the chances of defaulting on a mortgage, but it has also reduced the chances of qualifying for a mortgage.
If you’re a first time home buyer or are looking for a mortgage, reach out to Dan “The Mortgage Man”. I am a mortgage broker offering the best mortgage solutions across London and Woodstock ON and will help you work a way around the scenario you find yourself in. I will help you find affordable mortgage deals and help you achieve your goals of home ownership for twenty-one years. Whether you are a first-time home buyer or this is your fifth home, I will treat you with the utmost care and respect giving you a wealth of information and honesty in everything I do.