Qualifying for a mortgage – slight improvement headed your way!

Minister of Finance Morneau announced changes for qualifying for all insured mortgage. This means any insured mortgage with less or more than 20% down, will see an improvement to their borrowing capacity. This will take effect on April 6, 2020.

What’s the bottom line? An estimated increase in borrowing capacity of $2,509.56 come April 6th for the same qualified $500 monthly payment today. In other words, if you were approved for a $2,500 monthly payment now, you could buy $12,547.80 more house come April 6th. This can often times help when negotiating a purchase and you need $5,000 or $10,000 negotiating room.

The other piece of good news is the Bank of Canada will now control the new benchmark, not the Chartered Banks as is currently the case. Also, stay tuned for a likely change for the stress testing guidelines for “uninsured” mortgages. This is likely to be mirror by the OSFI (Office of the Superintendent of Financial Institutions) the Chartered Bank regulator.

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