If you have an insured mortgage up for renewal this year, things may have just gotten a lot easier for you. In this article, I’m sharing exactly what I’m talking about and what you need to know!
If your mortgage is up for renewal this year, there are several things you need to understand. I recently published this article “Renewing Your Mortgage in 2024? Here’s What to Expect”. It has everything you need to know from receiving your mortgage renewal letter to switching lenders.
As I touched on in that article, if your mortgage is insured and up for renewal, things may have just gotten a lot easier for you! Did you purchase a home with less than 20% down and are up for renewal? If you paid a mortgage default insurance premium, you may not have to qualify through the stress test again if you’re wanting to switch lenders.
In the past, if you wanted to switch lenders during the renewal period, you would have to requalify again by passing the federal stress test rate which is 5.25% or your contract rate plus 2%. The rate that is chosen depends on whichever one is higher.
Now, if you have an insured mortgage with less than 20% down, you can bypass this critical step!
There are a couple of conditions that need to be met to qualify for this. Firstly, your mortgage must be insured. This means that the default insurance premium was paid. Secondly, the amortization of the insured mortgage must be in line with the original mortgage term.
In terms of refinancing, if your insured mortgage was refinanced, this qualification rule can no longer be applied to your situation. Plus, there’s a max of $3,000 in penalties and fees that can be added at the time of switch. Anymore more and this may no longer apply as well.
As always, it’s best to reach out to me before making any decisions in terms of your mortgage. I’m here to help you determine what your best option is and how we can get you the best rate possible. Remember, when you reach out to me and work with a mortgage broker, you do not pay me a cent! I’m working for you and being paid by the lender, not you.
You may be wondering about uninsured mortgages with this rule. This new ruling doesn’t apply for uninsured mortgages. If you currently have an uninsured mortgage that is up for renewal, you will have to requalify through the stress test.
Insured mortgages are backed by government regulation, which protects lenders in case of default. The insurance protection lowers the risk for lenders, which allows regulations like this one to be eased for approving your mortgage.
Uninsured mortgages are secured through your property equity without the backing of insurance. This means the federal mortgage stress test provides an extra layer of risk management for lenders.
If you have an insured mortgage up for renewal this year, the first step is reaching out to me to discuss your situation. Together, we can discuss and plan for the best case scenario and then I get to work! I’ll work to find a lender that honours this ruling and find you your best rate possible.
Give me a call at 250-826-3111, apply on my website or contact me through my online contact form to start the process today. The more time we have to go through your situation and plans, the better!
Let’s get your application off the ground.
