Are you stressed about the new test?

Written by: Andrew Turnbull

Many potential first-time home buyers were taken aback when the finance minister introduced a new stress test, effective January 1, 2018. Many of these same people have been stressed ever since, wondering if they will ever be able to afford to buy in the GTA.

As a mortgage planner in the industry for over a decade, I have seen my fair share of regulation changes and tweaks, but this one has left many scratching their head and trying to figure out how to navigate through it. In my experience there are a few things that are not being discussed as regularly in the media.

Here are the top three:

  1. The stress test is only implemented on regulated mortgage companies under OSFI (Office of the Superintendent of Financial Institution).  These are the big banks and many smaller companies.  The stress test does not directly affect credit unions and other lenders.  There are ‘old stress test’ mortgage companies, that mortgage planners still have access to, to help you with a mortgage approval.
     
  2. If you are putting less than 20% as a down payment, nothing has changed for you in over a year, so stop stressing and find your first home!
     
  3. You now have more flexibility in the term of mortgage you want to choose.  One to four year terms have been a very good option for many borrowers, but it was an unequal playing field versus a five year term.  Now there is the same stress test for all terms.  Make sure you are taking advantage of this change, and get your mortgage working for you and your lifestyle.

Now is the time to have a specialized mortgage professional doing all the work and negotiation for you – many times at no cost. At TheRedPin Mortgage Brokerage, we are ready to navigate through this most recent change in the mortgage market and get you into your perfect home sooner.

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