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…

Many people may be in a situation where they have accumulated debts on high interest accounts such as credit cards and other credit sources.   The interest rates that are being charged on these loans may be quite high and may also be rising with the Bank of Canada interest rate hikes.

Homeowners may have the ability to take advantage of some options that may alleviate the high carrying costs and create a better cash flow on a monthly basis.   These options may be used to help pay these debts off sooner rather than later or help with monthly expenses that have risen in the current inflationary market.

What is the difference between an ARM (Adjustable rate mortgage) and a VRM (Variable rate mortgage)?

This is a great question and one that has become extremely relevant over the past few years.  Both options are tied to the lender’s Prime lending rate.  For example, you may receive an option for your mortgage rate to be “Prime minus 1%”, this simply means that your mortgage interest rate would be the lender’s Prime rate minus 1%.  If the Prime lending rate was 6.7%, your effective interest rate would be 5.7% (6.7% - 1%). 

There is technically a way to do this, purchase with completely borrowed funds.

Down payment is required of at least 5% of the purchase price if the property is $500,000 or less.