This was one of the new rules the Minister of Finance instated April 19, 2010. The Benchmark qualifying rate is the rate lenders will use to qualify borrowers wanting a variable rate mortgage term or fixed rate mortgage term less than 5 years. Most of the time this only applies when you have less than 20% downpayment when purchasing or are borrowing more than 80% of your homes value in the case of a refinance or renewal . So even though you will get best rates, the lender still wants to ensure you qualify when variable rates rise or if rates are higher when you renew your mortgage. The idea behind the new rule is to ensure borrowers have the capacity to handle higher payments. It has been over a year since the new rule came into effect, and we as mortgage brokers would say it has not had a large impact on borrowers that we have noticed.
The benchmark qualifying rate is always changing, contact your mortgage professional for the recent benchmark rate.
If you have any questions, please do not hesitate to contact Martene Woodward, Mortgage Associate with Argentum Mortgages at 866-932-8412 or info@mortgagegirl.ca
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