No Stress Test at Renewal Time! Now This is a Game Changer!

Feeling stuck with your current mortgage lender and unable to shop around for a better deal? Well, there are big changes coming to the Canadian mortgage world that might just give you the freedom you’ve been waiting for. Let’s break down what these changes mean for you and your mortgage payments.

The Big News: No More Stress Test for Mortgage Switches

Starting November 21, 2024, the Office of the Superintendent of Financial Institutions (OSFI) is dropping the stress test for uninsured mortgage switches. But what does that mean for you?

What’s an Uninsured Mortgage?

An uninsured mortgage is where you’ve put down 20% or more on your home. If that sounds like you, this change could be a game-changer!

What if you have an Insured Mortgage? 

Don't worry - the current rules already allow you to switch your mortgage without a stress test!

What’s the Stress Test?

The stress test, introduced in 2018, is how lenders ensure you can afford your mortgage, even if rates go up. Right now, you have to prove you can handle your mortgage at a rate that’s either 2% higher than your actual rate or the Bank of Canada’s benchmark rate, whichever is higher.

What This Change Means: Freedom to Switch Lenders Without Stress

The exciting part? With the new rule, when your mortgage is up for renewal, you can switch lenders without having to pass the stress test again. That’s huge!

Here is Why This Change Matters

1. More Freedom to Shop Around
Picture this: You’re a homeowner in Guelph, and your mortgage is about to renew. You’ve found a better rate with a new lender, but under the old rules, you’d have to prove you could afford a higher rate, even though you’ve been making payments for years. Now, you can switch to that better rate without all the extra hassle.

2. Potential Savings
Let’s talk numbers. Say you’ve got a $500,000 mortgage.  
- Current rate with Lender A: 5.5%  
- New offer from Lender B: 5%

With the old rules, you might’ve been stuck with Lender A. But now, you can switch to Lender B and save about $150 a month—over $1,800 a year!

3. More Competition Among Lenders
Since borrowers can move around more easily, lenders will need to work harder to keep your business. That could mean better rates and perks for you.

4. Less Stress at Renewal Time
Renewing your mortgage can be stressful enough. Now, you don’t have to worry about a test or if your financial situation has changed. Instead, you can focus on finding the best deal.

Why OSFI Made This Change

OSFI realized the stress test at renewal didn’t make sense, especially since some lenders don’t even check your employment status when renewing. This change helps level the playing field and gives borrowers more flexibility.

What Should You Do Next?

1. Mark the Date: November 21, 2024, is when the rule kicks in. If your mortgage renewal is coming up, keep this date in mind.
  
2. Shop Around: Don’t just stick with your current lender’s offer. Check with other lenders or a mortgage broker to see if you can get a better deal.

3. Run the Numbers: Calculate how much switching could save you. Be sure to factor in any fees from changing lenders.

4. Think Long-Term:  While a lower rate is tempting, don’t forget to consider things like prepayment options and the lender’s customer service.

5. Stay in the Loop: Keep an eye on interest rate trends to help guide your decision. Hint - we do this for you if you hire us as your mortgage brokers.

6. Let Us Help You: At BRX Mortgage, we’ll make the process of switching your mortgage as easy and seamless as possible!

The Bottom Line: A Win for Homeowners

This change is great news for Canadian homeowners with uninsured mortgages. It gives you more freedom to shop around and potentially save money. Just be sure to make informed decisions that align with your long-term financial goals.

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