Kevin W Lee
CENTURY 21 Leading Edge Realty Inc., Brokerage*
- 165 Main Street North
Markham, ON L3P 1Y2
Welcome To Kevinwleeproperty.com
SOLD 200K OVER ASKING! 44 Stanley Greene Blvd. Downsview Park
Recent Solds And Active Properties
New Mortgage Rule Changes
What You Need To Know
The Office of the Superintendent of Financial Institutions Canada (OSFI) published the final version of Guideline B-20 − Residential Mortgage Underwriting Practices and Procedures.
The revised Guideline, which comes into effect on January 1, 2018, applies to all federally regulated financial institutions.
- Mortgages are to be qualified at the greater of the BoC 5 yr Benchmark rate or the contract rate +2%
- Benchmark rate today 4.99%
- Previously, stress test requirements only applied to insured mortgages, variable mortgages and terms less than five years
- Applicable to Banks, Trust Companies, Monolines and all federally regulated lenders
A family with an annual income of $100,000 with a 20% down payment at a 5 year fixed rate 3.09% amortized over 25 years can currently afford a home worth $725,000
Under the new rules, they need to qualify at 5.09%. Now they can only afford a home worth $600,000—a difference of $125,000
Market Stats December 2017
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BUY FIRST OR SELL FIRST?
- Hunting experience more enjoyable.
- You’ll have time to wait until the right home comes up for sale.
- Less stressful knowing that if your offer is unsuccessful, you can wait for the next opportunity to come up.
- Unable to sell your home fast enough, you will find yourself owning two homes at once.
- Could mean paying two mortgages at the same time, not to mention all the other costs of home ownership.
- Trouble securing a mortgage for the new home.
- As a buyer with an existing home to sell, you can protect yourself by making your offer conditional on the sale of your current home. That means if you’re unable to sell within a specified period of time, you’re able to back out of the transaction.
- Worth pointing out that this condition will likely make your offer less attractive to the seller, especially if you’re buying in an area with a hot market.
- Biggest benefit is that you will know how much money the sale brought in, which will help determine how much you can afford to pay for your next home.
- You'll find yourself in a race aganist the clock with your closing date looming and potentially no home to move into when you move out of your current home.
- You may end up rushing the buying process and settling for a home that isn't ideal for you or pay more than our planned because you fell pressured.
HAVE A CONTIGENCY PLAN
- Have a back-up plan in place in case you are left with two homes, or no home, for a period of time.
- If the sale of your home closes first, you might consider a short term rental or moving in with family or friends. This could be better than settling for a less-than-ideal home because you are rushed.
- If the purchase of your new home closes first, you might need something called “bridge financing” to cover the down payment and other closing costs until the sale of your current home closes.
- No matter which option you choose, it’s important to remember that a registered real estate professional is knowledgeable about market conditions and will offer advice and solutions to guide you through the process
- They will be able to discuss various scenarios to make sure you have realistic expectations about what may happen and help you come up with a plan that works for you and your growing family.