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New Mortgage Rules as of OCTOBER 17, 2016 Attention first-time buyers!

Posted on October 4, 2016 by Chaba Tamasi

Posted in ihouseu.ca, Chaba Tamasi Realtor, iLOFTU.ca, downtown Toronto real estate, Chaba Tamasi Real Estate Services,

- EFFECTIVE OCTOBER 17TH, ANY ONE BUYING A NEW PROPERTY WITH LESS THAN 20% DOWN MUST QUALIFY BASED ON THE POSTED RATE (4.64%)

- THIS CAN MEAN THE DIFFERENCE IN $150,000 OR MORE FOR SOME BUYERS IN BUYING POWER

Therefore, any first time buyers looking to buy with less than 20% down, must have a firm accepted offer) in place before October 17th, 2016.

If they had a pre approval in place based on the 5yr fixed rate mortgage of (say 2.39%)....their pre approval will not be the same after october 17th. The pre approval amount will go down and could down a lot.

This is not good for first time buyers or any one buying with less than 20% down....another hit to first time buyers.

Greater details:

1) If a client has an approval in place (firm excepted offer) prior to October 17th, they can close up to 120 days later.. the rules are grandfathered.

2) If your client has an insured pre approval now, they will have to get a new one after October 17th. This is very important, especially if anyone is considering waiving the financing condition.

3) This rule change does not effect clients with at least 20% down payment (yet, but this could change as well) - we will see... fingers crossed it does not.

What this means in real numbers... if a client is looking to buy a property with less than 20% down, their budget has dropped by 20 to 25% on average. This is very unfortunate for first time home buys especially.

To see some examples of the impact:

Client before October 17th (buyer with 10% down)

- their budget to buy - $400,000 purchase price

After October 17th

- their budget goes down to - $300,000 purchase price.

This is drastic, but true.

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