Uninsured mortgages are now also subjected to a rate stress test
As of January 1, 2018, borrowers who finance their residential homes without purchasing a mortgage insurance (as is often the case when the borrower gives a down payment of 20% or over) must also be subjected to a rate stress test by their mortgage lender. This amendment to guideline B-20 is issued by the Office of the Superintendent of Financial Institutions.
Under this test, borrowers should show that they are able to reimburse their mortgage loan at an interest rate the greater of their contract mortgage rate plus 2% or the Bank of Canada's five-year fixed posted rate. So far, this test was mandatory only for borrowers who purchased mortgage insurance.
For a description of the terms and conditions related to the financing of a transaction, as well as the broker’s duties in this regard, read the article The rules for a successful financing, or contact Info OACIQ by email at email@example.com or by phone at 450-462-9800 or 1-800-440-7170.