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13 Jan

The spring market is coming. Time to get that mortgage preapproval.


Posted by: Anne Martin

I know its still cold and snowy out there, at least it is in Barrie where I am, but it’s good time to consider getting a mortgage pre-approval if you are considering purchasing a home in the near future.

As you probably already know, the federal government made some substantial rule changes in October and November 2016.  Not only will first time home buyers who have minimal down payments be affected, most home purchasers will see some change in their mortgage qualification.  Unfortunately, you may qualify for less than you did several months ago.  This was done in order to protect home buyers who need mortgage insurance from affordability issues should interest rates climb in the next five years.

This change involved an increase in the mortgage qualifying rate.  Previously, a higher than charged interest rate was used to qualify for mortgage terms less than 5 years or variable/adjustable interest rates, however, going forward most insured mortgages of any term will need to qualify at this rate.  Currently, 4.64%.  You don’t pay that, you will pay whatever the rate as specified on your contract.  This rate varies from lender to lender and mortgage to mortgage.  

Because of other changes to mortgage rules pertaining to government backed insured mortgages we now have a big spread of interest rates available. The rate you will receive will now be determined by qualification, lender programs and your situation.  

With lenders evaluating policies because of government changes to insured mortgages coupled with changes in the economy, we may soon see some moderate rate increases. Therefore, if you are considering buying a home in the near future, its best to obtain a mortgage pre-approval ASAP.  Not only will your application be viewed by a lender, your interest rate will be locked in for 90 to 120 days,

If you don’t find a home in that period of time, you may receive an extension of the expiry date, but best to be safe than sorry!  

So, the moral of the story, if you have any thoughts to making that purchase soon, contact a mortgage broker today.

For some further details, check out this article