Thinking of refinancing your mortgage in Ottawa?

February 13th, 2019Mortgage tips, Refinancing

Thinking of refinancing your mortgage in Ottawa?

Over the last few years, more changes have been introduced to the mortgage rules in Canada.  Some of these changes affected refinancing a mortgage.  These changes are important to know if you are thinking of refinancing your mortgage in Ottawa.  

In the past, one was able to refinance their home up to 95% of the value of their home.  However, a few years ago, the government capped refinances at 80% of the appraised value of a home.  

Until recently, a refinance was considered an insurable product and with that, could be offered with a great low rate.  However, with recent changes, the Office of the Superintendent of Financial Institutions and CMHC decided that a lender can no longer insure these products.

For someone wanting to refinance, this now means that lenders are not offering the same low rates for refinancing as for other situations such as a purchase mortgage.  As well, some lenders are not offering a refinance option at all.  Or, they can only offer a refinance option at a very high rate. The interest rate spread between an insured, insurable and uninsurable mortgage can be upwards of 0.55% difference now depending on the lender and product.  

In addition to the changes noted above, lenders are also qualifying a refinance now at the benchmark qualified rate, also known as a stress test.  This rate is currently at 5.34%.  

When mortgage rules tighten, having more options in terms of lenders, products and rates is very important.  This will help assure you are getting the best mortgage rates and options in Ottawa for your needs.