For a first-time condo buyer, just simply throwing your hat into the intimidating ring of real estate, mortgage applications and bank meetings can be a stressful proposition.
Toss in the new changes surrounding Canadian mortgage rules that have come into play over the past several months, and suddenly all that saving and planning you’ve done for the past several years seems like it might not be enough anymore.
The new Canadian mortgage rules introduced over the past few months are definitely aimed at making sure Canadians are more financially prepared when buying a home, but that doesn’t mean you have to give up on your dream of condo ownership just yet! We’re joined today by John Mayberry, Realtor® from the Calgary Home Boys and Josh Higgelke, Mortgage Broker of Record for Mortgage Connection, and they’re here to help walk us through what these changes mean for first-time condo buyers here in Alberta, and how you can set yourself up for success.
While you may have heard that the government’s rolled out some changes to mortgage rules here in Canada, you might not be quite familiar with what these adjustments entail. Essentially, the Canadian government has made alterations to the way mortgage rules work in an effort to ensure that as interest rates rise (which they finally started to do again, in 2017), Canadians are still able to afford their homes. To do so, they’ve implemented what’s referred to as a “stress test,” which is meant to help homebuyers avoid going into additional debt in order to afford to pay their mortgage.
While these changes will be helpful in cooling down some of the red-hot real estate markets across the country (for example, in major centres like Vancouver or Toronto), the overall result will be a reduction in buying power for Canadians, as debts that exceed a ratio of 2:31 will no longer be considered for lending. This is unfortunate news for many Canadians, as it means they may not be able to buy the same home they would have been approved for a year ago. However, that doesn’t mean you’re locked out of buying that first condo just yet – it just means you might need to make a bit of a new plan to move forward.
The new mortgage rules in Canada have tightened up lending practices for first-time homebuyers, but Mayberry and Higgelke have helped us come up with some steps to take that should set you back on track for making that big purchase:
The new Canadian mortgage rules have the potential to make it more difficult to enter into condo ownership as a first-time homebuyer – but ultimately, these changes are to protect Canadians from getting in over their heads financially, which is definitely a good thing.
We want to thank John Mayberry from the Calgary Home Boys for joining us to chat about the Calgary real estate market, and Josh Higgelke from Mortgage Connection for shedding some light on these recent mortgage rule changes.
If you’re thinking of buying a condo in the near future, be sure to join the conversation and educate yourself so that you can make the right decisions when it comes time to make that big purchase – get in touch with folks who have experience with the ins and outs of condo ownership, and join Alberta Condo Owners for Change today for all sorts of helpful info and advice.