​How Will Canada’s New Mortgage Rules Affect Refinancing or Renewals?

On January 1, 2018, Canada’s mortgage lending rules and requirements became more challenging for borrowers.

The new rules also known as the ‘mortgage stress-test’ affect ALL borrowers with a slight exception (discussed below). Whether you are renewing, refinancing or purchasing, if you are dealing with a federally regulated financial institutions, you will have to adhere to the new mortgage rules and pass the mortgage stress test.

The only institutions who do not have to adhere to the stress-test are credit unions accessed the mortgage broker channel. In addition, private lenders do not follow the stress-test guidelines although their rates are set at much higher interest rates.

Here is an example of federally regulated institutions:

Royal Bank of Canada
Scotiabank
CIBC
National Bank of Canada
Bank of Montreal

Here is an example of non-federally regulated institutions:

Duca Credit Union (accessed through the broker channel for best mortgage rates).

Can you be denied a mortgage at renewal?

If you are renewing your mortgage because it’s come up for maturity, then, in most cases, if you are with a prime lender, you do not have to re-qualify using the mortgage stress-test criteria.

However, if you want to obtain a better interest rate and save more money on mortgage maturity, it would be beneficial to shop around instead of simply renewing and paying a higher interest unnecessarily.

If you fail the stress-test, you will most likely have to stay with your existing lender for a new term and continue paying a higher interest rate.

The best course of action is to work with a refinancing and mortgage renewal expert who can help you work through the mortgage stress test and debt service ratios to ensure you qualify.

Contact Sarah Colucci, Mortgage Expert about any mortgage renewal or refinancing questions free of charge. We pair you with the best mortgage rate, best product and best mortgage service.

If you need help passing the stress test, contact us today.

The stress test rate is currently 5.19%