As Canadian homeowners gear up to renew their mortgages in the coming year, recent renewal updates outlined in the Liberals’ fall economic statement could offer potential relief and increased flexibility in navigating the process. Here’s a simplified breakdown of the proposed Canadian Mortgage Charter.
Canadian Mortgage Charter
The Liberals have introduced the Canadian Mortgage Charter. This charter sets expectations for how lenders interact with homeowners during the mortgage renewal process. The goal is to support Canadians facing higher monthly payments in the current higher interest rate environment. The charter is expected to be voluntary for lenders, but it sends a significant message to Canadians and financial institutions. Its introduction aligns with a broader focus on housing affordability and aims to foster positive changes in the mortgage market.
Stress Test Changes for Insured Mortgages
Homeowners with insured mortgages can be exempt from the stress test when renewing with a new lender. The stress test, a minimum qualifying rate, has been a barrier for many Canadians seeking better rates. This change could level the playing field and empower homeowners to explore a more competitive market. Homeowners with default insurance can qualify at the contract rate versus the stress-test rate.
More Power to Homeowners
Homeowners gain more bargaining power during mortgage renewal negotiations by removing the stress test requirement for switching lenders on insured mortgages. Mortgage brokers can now shop your renewal around for the best rates, fostering a more competitive environment among lenders.
Banks Contacting Homeowners 4-6 Months Before Renewal Dates
One new suggestion in the charter is that banks proactively reach out to borrowers four to six months before their mortgage is up for renewal. If a bank offers a rate six months in advance, they would expect you to accept the rate at that time to complete an “early renewal.” Excepting a higher rate early could cost you money, so let’s chat first.
Additional Measures for Homeowners
The charter also includes measures echoing guidelines implemented by the Financial Consumer Agency of Canada, such as temporarily extending amortizations for at-risk homeowners and waiving fees associated with relief measures. It is up to each lending institution to accept this additional measure.
The proposed Canadian Mortgage Charter could allow Canadian homeowners to navigate their mortgage renewals with more flexibility. The changes allow homeowners to fully take advantage of using a mortgage broker’s services to open the door to more options. Let’s discuss these renewal updates when the time is right, so you can make informed decisions about your mortgage in the coming year. Contact me today!
Recent Comments