Date: September 10, 2024

Category: Blogs,Mortgage Tips & Advice

🆕 Big News! Several Changes to Mortgage Rules in September

There have been a few changes this month that will impact homebuyers and homeowners in the future, and all these changes are good news for borrowers! Whether you’re renewing an existing mortgage or buying a home for the first time, here’s what you need to know:

📉 Stress Test Changes for Homeowners Switching Lenders

What’s new?

Homeowners with uninsured mortgages (those with at least a 20% down payment) will no longer need to pass the stress test when switching lenders at renewal.

Details:

  • No stress test needed if you’re not increasing your loan amount.
  • This makes it easier to shop around for better rates without being bound to your current lender.
  • The stress test still applies if you’re applying for a new mortgage or borrowing more than your existing loan amount.

🛑 What hasn’t changed?

If you’re applying for a brand new mortgage or refinancing with extra funds, the stress test rules will still apply. ✅

Why is this good?

Homeowners facing high renewal rates (though rates have stabilized somewhat) will now have more flexibility to switch lenders and save on interest without worrying about passing the stress test.

🏠 30-Year Mortgages for First-Time Buyers and all buyers of New Builds

What’s new?

The federal government announced a 30-year amortization option for first-time homebuyers purchasing new build homes.

Key Details:

  • Changes are expected to take effect by December 2024, with more details to follow.
  • This option only applies to new construction homes.
  • Lower monthly payments will make buying a home more affordable, especially in high-priced markets. đź“Š

Why is this great?

This will help buyers manage their budgets more easily and potentially qualify for larger mortgages while keeping payments low. 🏡

đź“… Insured Mortgages up to $1.5 Million

What’s new?

In addition to the new-build program, the government has expanded the 30-year amortization option to all buyers with insured mortgages, up to $1.5 million in value.

Key Details:

  • This applies to insured mortgages (less than 20% down payment).
  • Buyers can qualify for more affordable monthly payments by spreading their mortgage over 30 years.
  • The maximum home value for insured mortgages has increased from $1 million to $1.5 million.
  • The minimum down payment for a home priced at $1.5 million would still follow existing rules: 5% on the first $500,000 and 10% on the amount above $500,000. The total down payment for a $1.5M home would be $125,000(not a flat 20%). This allows for a lower entry point but results in higher monthly payments due to insurance premiums and extended amortization.

Why is this great?

This expansion gives buyers more flexibility and opportunities to enter the housing market with manageable payments, especially in high-cost areas. 📉

Summary of the Changes:

  • 🔄 Easier Mortgage Renewals: Homeowners can switch lenders at renewal without the burden of a stress test if the mortgage amount stays the same.
  • đź“… 30-Year Amortizations and Changes in Insured Mortgage Cap: Lower monthly payments for home buyers purchasing new builds or insured mortgages up to $1.5 million.

These updates create more opportunities for homeowners and first-time buyers alike, making it easier to manage your mortgage and achieve homeownership!

Next Steps:

Over the coming weeks, as more details emerge on how these changes will be implemented, we’ll keep you updated.

If you want to see how these changes affect your mortgage plans, I’d be happy to help. Just reach out! 📲

Talk soon,

Ana

Mortgages can be complicated; we are here to help you make “cents” of it.

We focus on Mortgage Solutions, Period!

To learn more connect with Ana Cruz 905.870.0513 or email at ana@askanacruz.ca