OSFI Announces Removal of Stress Test for Uninsured Mortgage Switches
Glenn Issler • September 30, 2024
Starting November 21, 2024, borrowers switching lenders with uninsured mortgages will no longer face the stress test, thanks to a new policy from OSFI. Previously, uninsured borrowers needed to prove they could afford their mortgage at a higher rate, which created barriers to switching for better terms. This change encourages competition among lenders and aligns the rules with insured mortgages, providing more flexibility and choice for homeowners.
The decision responds to concerns raised by the Competition Bureau and reflects shifting risk management trends in the mortgage market.
Key Points:
- Applies to Straight Switches: This policy is for borrowers switching lenders while maintaining their loan amount and amortization schedule.
- Stress Test Removed: No more proving affordability at higher rates during switches, allowing for easier access to competitive offers.
- Supports Borrower Flexibility: Homeowners now have more options to find the best mortgage rates at renewal without the stress test obstacle.
Why the Change?
OSFI initially maintained the stress test to manage risk but has now reversed this stance after evaluating that the original concerns have not significantly materialized. This move is designed to balance fairness for borrowers and enhance competition in the mortgage market.
How It Affects You
For those with uninsured mortgages approaching renewal, this policy change is a win. You'll now have the opportunity to seek out better mortgage rates without facing a stress test, making it easier to reduce financial strain, especially in a rising interest rate environment.
Stay informed and take advantage of these changes by reviewing your mortgage options today!
Glenn Issler
Mortgage Advisor
How to Start Saving for a Down Payment (Without Overhauling Your Life) Let’s face it—saving money isn’t always easy. Life is expensive, and setting aside extra cash takes discipline and a clear plan. Whether your goal is to buy your first home or make a move to something new, building up a down payment is one of the biggest financial hurdles. The good news? You don’t have to do it alone—and it might be simpler than you think. Step 1: Know Your Numbers Before you can start saving, you need to know where you stand. That means getting clear on two things: how much money you bring in and how much of it is going out. Figure out your monthly income. Use your net (after-tax) income, not your gross. If you’re self-employed or your income fluctuates, take an average over the last few months. Don’t forget to include occasional income like tax returns, bonuses, or government benefits. Track your spending. Go through your last 2–3 months of bank and credit card statements. List out your regular bills (rent, phone, groceries), then your extras (dining out, subscriptions, impulse buys). You might be surprised where your money’s going. This part isn’t always fun—but it’s empowering. You can’t change what you don’t see. Step 2: Create a Plan That Works for You Once you have the full picture, it’s time to make a plan. The basic formula for saving is simple: Spend less than you earn. Save the difference. But in real life, it’s more about small adjustments than major sacrifices. Cut what doesn’t matter. Cancel unused subscriptions or set a dining-out limit. Automate your savings. Set up a separate “down payment” account and auto-transfer money on payday—even if it’s just $50. Find ways to boost your income. Can you pick up a side job, sell unused stuff, or ask for a raise? Consistency matters more than big chunks. Start small and build momentum. Step 3: Think Bigger Than Just Saving A lot of people assume saving for a down payment is the first—and only—step toward buying a home. But there’s more to it. When you apply for a mortgage, lenders look at: Your income Your debt Your credit score Your down payment That means even while you’re saving, you can (and should) be doing things like: Building your credit score Paying down high-interest debt Gathering documents for pre-approval That’s where we come in. Step 4: Get Advice Early Saving up for a home doesn’t have to be a solo mission. In fact, talking to a mortgage professional early in the process can help you avoid missteps and reach your goal faster. We can: Help you calculate how much you actually need to save Offer tips to strengthen your application while you save Explore alternate down payment options (like gifts or programs for first-time buyers) Build a step-by-step plan to get you mortgage-ready Ready to get serious about buying a home? We’d love to help you build a plan that fits your life—and your goals. Reach out anytime for a no-pressure conversation.
When calculating if you can afford to purchase a property, don’t just figure out a rough downpayment and quickly move on from there. Several other costs need to be considered when buying a property; these are called your closing costs. Closing costs refer to the things you’ll have to pay for out of your pocket and the amount of money necessary to finalize the purchase of a property. And like most things in life, it pays to plan ahead when it comes to closing costs. Closing costs should be part of the pre-approval conversation as they are just as important as saving for your downpayment. Now, if your mortgage is high-ratio and requires mortgage default insurance, the lender will need to confirm that you have at least 1.5% of the purchase price available to close the mortgage. This is in addition to your downpayment. So if your downpayment is 10% of the purchase price, you’ll want to have at least 11.5% available to bring everything together. But of course, the more cash you have to fall back on, the better. So with that said, here is a list of the things that will cost you money when you’re buying a property. As prices vary per service, if you’d like a more accurate estimate of costs, please connect anytime, it would be a pleasure to walk through the exact numbers with you. Inspection or Appraisal A home inspection is when you hire a professional to assess the property's condition to make sure that you won’t be surprised by unexpected issues. An appraisal is when you hire a professional to compare the property's value against other properties that have recently sold in the area. The cost of a home inspection is yours, while the appraisal cost is sometimes covered by your mortgage default insurance and sometimes covered by you! Lawyer or Notary Fees To handle all the legal paperwork, you’re required to hire a legal real estate professional. They’ll be responsible for transferring the title from the seller's name into your name and make sure the lender is registered correctly on the title. Chances are, this will be one of your most significant expenses, except if you live in a province with a property transfer tax. Taxes Depending on which province you live in and the purchase price of the property you’re buying, you might have to pay a property transfer tax or land transfer tax. This cost can be high, upwards of 1-2% of the purchase price. So you’ll want to know the numbers well ahead of time. Insurance Before you can close on mortgage financing, all financial institutions want to see that you have property/home insurance in place for when you take possession. If disaster strikes and something happens to the property, your lender must be listed on your insurance policy. Unlike property insurance, which is mandatory, you might also consider mortgage insurance, life insurance, or a disability insurance policy that protects you in case of unforeseen events. Not necessary, but worth a conversation. Moving Expenses Congratulations, you just bought a new property; now you have to get all your stuff there! Don’t underestimate the cost of moving. If you’re moving across the country, the cost of hiring a moving company is steep, while renting a moving truck is a little more reasonable; it all adds up. Hopefully, if you’re moving locally, your costs amount to gas money and pizza for friends. Utilities Hooking up new services to a property is more time-consuming than costly. However, if you’re moving to a new province or don’t have a history of paying utilities, you might be required to come up with a deposit for services. It doesn’t really make sense to buy a property if you can’t afford to turn on the power or connect the water. So there you have it; this covers most of the costs associated with buying a new property. However, this list is by no means exhaustive, but as mentioned earlier, planning for these costs is a good idea and should be part of the pre-approval process. If you have any questions about your closing costs or anything else mortgage-related, please connect anytime; it would be great to hear from you!
