More choices at renewal time starting November 21st, 2024
OSFI has announced that uninsured mortgage borrowers will be allowed to switch from their current lender to a new lender at renewal without requiring a stress test if they find a better product/rate with another lender. This change goes into effect November 21st,2024. Insured borrowers (those who put less than 20% down on purchase) have had option since early this year.
Currently the conventional mortgage borrowers must qualify at the stress test rate (which has been the contract rate + 2% mainly) to show they can afford the mortgage in the event rates went up.
This change, one that has been advocated by the mortgage industry for a long time is a welcome change on the side of the borrower. This means that if you wish to transfer your mortgage to a lender who may be offering a better program that meets your needs you will be able to do so without the added stress test pain allowing you to shop the most suitable solution from many institutions.
You may be switching to a short term Adjustable or Variable rate mortgage in the hopes of locking into a fixed rate term once you feel the rates have come down far enough and the possibility of rates going down further is not likely.
Or you may wish to lock into a shorter than 5 year fixed rate term in the hopes that rates will level off somewhere in the low to mid 3 percent range during that time, allowing you to enjoy the security of having a payment amount that will not fluctuate right now and renew at the lowest rate when the mortgage matures.
One thing to remember is that in order to avoid the stress test the mortgage can only be switched as it currently stands, including the remaining balance and remaining amortization. Any increase to either the mortgage balance or amortization will trigger the stress test due to restructuring of the original mortgage.
Shopping for a better rate will very soon become much easier and preventing your current lender from holding you a hostage to whatever rate they offer. More competition means better products and service for you. Should you or someone you know have their mortgage coming up soon for renewal, this would be a best time to prepare.
We always try to prepare our clients 6 months before maturity so that they can be in the best position to take advantage of the lowest market rate for the product they choose.
Feel free to reach with any questions or thoughts about this change as we always enjoy hearing from you.
If you have found this information helpful, and perhaps useful in the near future we hope you will share it. We also hope we can count on you to share out contact information with anyone you know and connect them to us if they need help with their mortgage.
Your friends,
Taufeeq and Victor
Mortgage AgentsTaufeeq: (905)699-7831, Victor: (416)566-2516
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