Mortgage Blog
Finally Stress test Removed from all types of Renewal Switches
October 3, 2024 | Posted by: Sarabjit Dhuna
OSFI Finally Announced elimination of stress test requirements for uninsured mortgage. Finally, both insured and uninsured mortgage does not require to have mortgage stress at renewals or whenever they change lenders. Over 60% to 70% Canadian houseowners have uninsured Mortgage. They can finally take advantage like insured mortgage.
Let's First Talk about what is Stress test
Lenders or Banks use federal Stress test to check you can handle the payment if rate goes higher or your income decrease. As per stress test, they can limit how much you can borrow from them to buy house. Lender and banks uses federal rate which is 2.0%(plus your actual rate) or 5.25.
Advantages
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Without Stress test, borrowers can finally shop around for better deal for their mortgage for the potential save without the fear of disqualification.
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With this changes, we can see healthy competition between banks, b and c types of lenders.
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For example, if Someone took 600,000 insured Mortgage (5 years Fixed) with 25 years of amortization period at the rate of 5.20 then mortgage would be $3,558/month.
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Now, if they switch to another lender who offers 600,000 insured mortgage (5 years Fixed) 25 years of amortization at the rate of 5.05 then mortgage would be 3,506/month. They are saving $52 every month. Borrower can almost get around $4700 in saving.
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