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Changes to mortgage rules, effective January 1, 2015!

Effective January 1, 2015, Underwriters will be using different guidelines to arrive at the amount of mortgage prospective Buyers qualify for. All existing unsecured debt payments, such as credit cards, lines of credit, student loans etc., will be calculated using 3% repayment on the balance, regardless of the contractual amount required to be paid each month!  These debts and their corresponding 3% payments will ultimately determine your mortgage qualification amount.  The more outstanding debt you have, the smaller the mortgage amount for which you qualify!

Prior to January 1, 2015, Lenders accepted the contractual payments for unsecured debts, even if the monthly payments are lower than 3% of outstanding balances.  E.g. if you had an outstanding LOC debt of 20000.00 and the IR was 6%, the bank would require 100.00, new rules for 2015, would require 3% of debt balance, 600.00 in this particular scenario, be used for qualification purposes!

This would seriously impact qualification ratios and purchasing power.  If you have balances on  LOC, Student loans, vehicle loan, credit cards etc., your mortgage qualification amount will dip even more.

Given that mortgage rates continue to be at an historic low, the full impact of these new qualifications will be even more magnified and pronounced, should rates start to climb.  If you are thinking of buying, selling, or investing, I can help. Call Claire Weston, Broker, Royal LePage Trinity Realty, for all of your real estate needs.

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# Hi there! I know this is kind of off topic but I was wondering if you knew where I could get a captcha plugin for my comment form? I'm using the same blog platform as yours and I'm having trouble finding one? Thanks a lot!

Sunday, January 18, 2015 11:04 PM by Sadie

Hi there! I know this is kind of off topic but I was wondering if you knew where

I could get a captcha plugin for my comment form?

I'm using the same blog platform as yours and I'm having

trouble finding one? Thanks a lot!

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