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How the Stress Test Will Impact You (Part 1)

by mapleleafmortgages on November 7, 2016

Have You Heard the News?

Do you struggle with putting at least a 20% down payment for a home?

The stress test came in effect on October 17th, 2016, testing prospective home buyers on their ability to pay back a loan.

The stress test is required for all new insured mortgages. This includes all fixed and variable rate mortgages.  Not everyone is impacted, such as home buyers putting more than 20% down payment, homeowners with an existing insured mortgage or those renewing existing insured mortgages.

What the Stress Test Means

It is a test on your ability to pay your mortgage if interest rates were higher. Home buyers will now have to qualify against the Bank of Canada’s posted rate of 4.64%. As long as you qualify, you don’t have to make the higher payments and can still choose to pay at a lower interest rate.

Before, if you wanted a fixed mortgage rate at 2.39%, you could qualify at the 2.39% rate. Now, if you want that 2.39% rate, you’ll have to be able to qualify and pay your mortgage at a rate of 4.64% in order to get that 2.39% fixed rate.

Want to read more? Stay tuned for the next section: Why was the Stress Test Implemented?

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