The day is here - Ottawa’s recent announcement of a new mortgage law for home buyers will be put into action as of October 17, 2016.
Ottawa’s new mortgage laws comes in hopes of avoiding any further debt taken on by Canadian citizens that can’t afford their homes thus putting the country in economic strife.
The new mortgage rules are expected to limit the buying abilities of home buyers by way of a new and improved “stress test”.
Though the home buyer’s stress test is not necessarily a new mandate - the stress test had to be completed by borrower’s of specific mortgage types. What’s changed now is that borrower’s with less than a 20 percent down payment towards the purchase price will be required to complete the stress test.
Here’s what Ottawa is hoping as a result the new law:
Strengthen the Canadian Economy
What most of us don’t know is that when a mortgage is taken out without insurance, the Canadian Government will incur the cost of the debt if the mortgage goes into “default.” The new law would mean that Canadian Government would be in less of a risk in expensive housing markets like Vancouver and Toronto where mortgages average $1,000,000.
Keep Canadians Out Of Debt
Many Canadians simply can’t afford the home they own despite being approved for a high-ratio mortgage, meaning the borrower has made a downpayment of less than 20% of the purchase price. While the new law means that fewer Canadians will be able to purchase a home at the time that they would like, the new law will ensure Canadians are financially viable to purchase a home.
Crack Down the Law on Foreign Home Buyers
With all of the recent attention supporting Vancouver’s real estate market being impacted by foreign buyers, the Canadian Government is hoping that the same doesn’t happen to the rest of Canada.