The Government of Canada has introduced major mortgage reforms to make homeownership more accessible and affordable for Canadians. In this blog, we're talking about what is changing and how this impacts our community.

Changes include:

• Borrowers switching lenders at renewal will not need to complete the Stress Test
  • Canada’s banking regulator, OSFI, is poised to ease mortgage rules for homeowners looking to switch lenders during mortgage renewal. Effective November 21, borrowers renewing with a different lender will no longer need to complete the mortgage stress test, simplifying the process for those with uninsured mortgages. In the past, even a straightforward renewal switch required borrowers to demonstrate their ability to manage payments at a rate 2% higher than the new mortgage contract rate. This posed significant challenges as rates climbed to 6%, bringing the stress test rate to 8%. While insured mortgages were already exempt from this requirement, uninsured borrowers will now receive similar treatment.
• Higher Insured-Mortgage Cap
  • Starting December 15, 2024, the insured mortgage cap will increase from $1 million to $1.5 million—the first adjustment since 2012! This update better aligns with today’s housing market, allowing more Canadians to qualify for a mortgage with less than a 20% down payment.
• Extended 30-Year Amortization
  • Also coming into effect December 15, 2024, first-time homebuyers and new-build purchasers will be eligible for 30-year mortgage amortizations (previously capped at 25 years) on insured mortgages. The longer amortization period will help make home ownership more affordable by lowering monthly mortgage payments. The change should also encourage new home construction to help ease the housing shortage.

These reforms build on earlier initiatives from 2024, including:

• RRSP Home Buyer’s Plan
  • The limit was raised from $35,000 to $60,000, offering Canadians more flexibility when using their savings for a home purchase.
• Permanent Amortization Relief
  • Homeowners facing rising mortgage payments now have long-term support through this measure.

As more details are announced we will keep you informed, but these updates are designed to create new pathways to homeownership. Whether you're considering a move, or nearing mortgage renewal, now’s the perfect time to explore your options!

If you have any questions or need personalized advice on how these changes impact you, The House Team is here to help. Call our team at (613) 962-1388 or request a free appointment HERE. We are here to make the process as smooth and stress-free as possible.

Recent data from Mortgage Professionals Canada shows that 23% of all Canadian mortgage holders will renew their mortgage within the next year, and a staggering 50% will renew within two years.
 
So chances are, you are looking at a mortgage renewal within the next two years and if not, unless you are in the enviable position of being able to pay off your mortgage at the end of your current term, a mortgage renewal will be on the horizon for you.
 
When it comes to renewing your mortgage, whether you’re looking to lower your monthly payments, tap into home equity, or take advantage of the latest mortgage trends, preparing for your renewal can unlock new opportunities.

Here are a few tips to put yourself in the most advantageous position possible at renewal time:

1. Start early.

Begin by reaching out to a mortgage broker four to six months before your renewal date. We’ll review your current mortgage and start exploring options. It’s smart to get a 120-day rate hold so you’re protected against any rate increases while we shop around or, perhaps we’ll explore a more flexible solution that fits your evolving financial goals.

2. Review your financial goals.

Is your financial situation the same as when we last negotiated your mortgage? Whether you're planning to pay off your mortgage faster or want to access home equity for renovations or investments, this is the time to re-evaluate your priorities and make any necessary adjustments to your mortgage.

3. Consider variable rates.

With the Bank of Canada’s recent rate cuts, and more expected, variable rate mortgages are regaining some of their former popularity. Many homeowners are turning to this option for potential cost savings. If you’ve been locked into a fixed-rate mortgage, it might be worth discussing a switch to a variable rate at renewal with your mortgage broker. 

4. Leverage your home equity.

If you've built up equity in your home, you can use this to consolidate debt, invest, or cover significant expenses like home renovations. Together, we can explore options that allow you to access equity while keeping your payments manageable. 
            
Note: This option can also be explored outside of mortgage renewal time. If you want to discuss how you can leverage your home equity at any point during your mortgage term, get in touch with our team for a review of your situation.

5. Shop around for the best rate.

Don’t assume your current lender offers the best deal. Shopping around can help you secure a better interest rate or more favourable terms. Reach out and we can do the heavy lifting for you, comparing multiple lenders and options to find what suits you best. 

6. Get pre-approved.

If you're considering switching lenders or mortgage products, getting pre-approved ensures you're ready when it’s time to renew. Pre-approval locks in a rate, so you’re protected if rates rise. 

7. Plan for the future.

Your mortgage renewal is a great time to reassess your financial plans. Will you need a mortgage that's flexible with prepayment options, or are you focused on paying it off quickly? Plan with both short-term needs and long-term goals in mind. 
 
Taking a proactive approach to your mortgage renewal could save you thousands of dollars and set you up for long-term financial success. The House Team is here to help you navigate the renewal process and find the best solution for your needs. 

If you have any questions or need personalized advice on your mortgage needs, The House Team is here to help. Call our team at (613) 962-1388 or request a free appointment HERE. We are here to make the process as smooth and stress-free as possible.