An announcement made in the beginning of October by Finance Minister Bill Morneau has been causing a lot of discussion recently. In an attempt to cool the hot housing market, governments have been rolling out new rules for mortgage financing. It started with the foreign real estate tax implemented by the BC Provincial government and now the Feds are bringing national changes to the housing finance system. What does this mean for future home buyers?
Applying a Mortgage Rate Stress Test to All Insured Mortgages
As of Oct. 17, all insured mortgages will have to undergo a stress test to determine whether a borrower could still make mortgage payments if faced with higher interest rates or reduced income. Mortgage loan insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price, enabling buyers to purchase homes with a minimum down payment starting at 5%. Previously, such stress tests weren’t required for fixed-rate mortgages longer than five years. A report by Genworth MI Canada says over one-third of insured mortgages — predominantly borrowed by first-time homebuyers — would have difficultly meeting the new requirements.
Closing Tax Loopholes for Foreign Buyers
In a move to reduce the flow of foreign cash into markets like Toronto and Vancouver, the government will be tightening the loophole on an exemption that allows homeowners to avoid paying capital gains tax on the sale of a principal residence. Going forward, that exemption will only be available to Canadian residents, and families will only be allowed to designate one home as their primary residence.
While the intent behind the changes is to cool the hot housing market, it’s unclear what the full impact will be at this time. If you’re unsure how these new rules may affect you, you’re not alone. With so many people looking to buy in Kelowna right now, the news about these new rules has definitely caused a stir. But it’s not all bad news, mortgage professionals are well versed in finding the right solutions for their clients. Our mortgage brokers are more than happy to answer any of the questions you may have about these changes and can work with you to find the best course of action to get you into the home that’s right for you. So before you make a decision on your next mortgage, get the information from your mortgage specialist!
JOHN ANTLE MORTGAGES – KELOWNA’S MORTGAGE SPECIALIST
We specialise in offering mortgage solutions that go above and ‘beyond the bank’. This means we are able to provide flexible solutions at great rates, often better than what traditional banks have to offer. Working with a mortgage broker can open up your options, allow for potentially greater solutions for your situation. We work with a variety clients including first-time buyers, those looking to transition from renting to owning or renewing a mortgage, self-employed business people, as well as investors in rental and/or vacation properties.
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