Buying a home in the hot housing markets of major Canadian cities in the recent years have been a possible dream for first time homebuyers, particularly because many of those houses have had suites they could rent out.
With new mortgage rules coming into effect April 19th, it will pretty much wipe out the advantage in the eyes of banks handing out mortgages.
The new regulations are designed to prevent speculation in the market noted Canada Mortgage and Housing Corporation Jack Aubrey.
As it stands, landlords can use 80% of their rental income to offset monthly mortgage payments. However, under the new rules, only 50% of a landlord’s rental income will be used. Even with that amount, the money will not be used to offset their monthly mortgage payment. It will be added to their total income, which forces them to qualify for the entire monthly mortgage.
With this said, the rule changes will make it more difficult for people to buy a property separate to be used as a revenue generator.
In a few months we will have evidence of whether these changes have taken a toll on landlords, and hopefully by then a solution will be made to help everyone out.
