Getting financing is a daunting task, and since January 1, 2018, the stress test has severely impacted many potential buyers. However, don’t stress about the stress test. Some credit unions are still qualifying mortgages at their posted rate. Which means you can still qualify as if it was 2017. That means you can get up to 18% more buying power by qualifying with a credit union instead of a bank.
Some Ontario Credit Unions, like Meridian, are currently not doing “stress tests” on the mortgages they are issuing.
The stress test was implemented to ensure Canadians do not overextend themselves when it comes to mortgages. It was a move to protect them from rising interest rates in the future.
The interest rates will increase, so if you are going to max out your mortgage with a credit union, get a 5-year fixed-rate mortgage, so you are immune to interest rate increases. A 5-year fixed-mortgage from a credit union is a great product for someone who has a 5-year plan. Fixed mortgages usually come with much higher cancellation penalties. Only take a fixed-rate mortgage if homeownership is in your 5-year plan.
Meridian is Ontario’s Largest Credit Union
“Meridian is carefully reviewing the recently announced amendments to the federal banking regulator’s B-20 guideline to assess how they may impact our lending policies moving into 2018,” said Bill Whyte, senior vice-president and chief member experience officer with Meridian.
“The B-20 guideline does not technically apply to our business. However, Meridian will consider that guideline as we are a prudent and responsible lender with a strong balance sheet. Our primary goal is to have our members’ backs by ensuring they are well-informed about all the financial aspects of homeownership and home affordability.”