The New Stress Test for Uninsured Mortgages

Lorraine and I recently attended a seminar by The Mortgage Group regarding the new requirements for uninsured mortgages taking place January 1st, 2018.

The purpose of the new requirements are to keep people within a safe margin on their biggest investment. However, for many people it will be tougher to qualify for a traditional mortgage and may push more people to private lenders at usurious interest rates.

In a nutshell, Guideline B-20 now requires borrowers who have a down payment of 20% or more to qualify for a mortgage at a higher rate. Borrowers will have to be approved at either the five-year mortgage rate published by the Bank of Canada (currently 4.99%) OR the mortgage rate the federally-regulated financial institution offers plus 2%, whichever is higher.

The revised Guideline B-20 comes into effect on January 1, 2018. However, if a borrower has put down a deposit and received a mortgage eligibility assessment or pre-approval from a federally-regulated lender prior to January 1, 2018, the lender has the discretion to offer the loan based on the pre-existing guideline (including the prior qualification rate).
It is important that our clients who have put down a deposit on a home but don’t need a mortgage for some time or are uncertain about access to mortgage financing as a result of the revisions to Guideline B-20 to contact their federally-regulated lender directly.