Finally some good news – homeowners now have better options for mortgage transfer on renewal. The Office of the Superintendent of Financial Institutions (OFSI) has announced that homeowners should have options on renewal of their mortgage at maturity or if they want to renew early. For all homeowners that purchased their home with an “insured” mortgage – using less than 20% down payment they will be allowed to transfer their mortgage to another lender without the stress test for qualifying. This only affects those high ratio buyers with an “insured” mortgage. Those who purchased with 20% or higher will not have access to this option and must qualify with the stress test. In addition if a homeowner has refinanced their property along the way and no longer “insured” by one of the insurers (CMHC, Sagen or CG) this option will not apply
The stress test requires the homeowner to qualify at the greater of the benchmark rate or the contract rate plus 2%. At this point due to higher rates the qualifying rate is the contract rate plus 2%.
This new policy for homeowners with an “insured” mortgage will provide a big benefit to homeowners as they aren’t locked into only a renewal rate with their existing lender at maturity or earlier.
Consumers with insurable or conventional mortgages who can’t take advantage of this option are free to contact their MLA or directly to OFSI to share your voice on this limitation to all homeowners – Contact Us (osfi-bsif.gc.ca)
If you are unclear if your mortgage is “insured” or want to discuss options for your specific situation, reach out to your independent mortgage broker. In some cases we have clients who don’t know and their bank may not confirmation of insured status. We recommend you get accurate information before making any move.
Always consult a professional before making any big decisions. We are here to help!-