Why your credit score matters when you’re buying a home
With the new mortgage rules coming into effect across Canada, you might be wondering what that means for you—and whether you can still enter the market. One of the new rules applies a stress test to borrowers, which means you need to qualify at a higher rate when you have less than 20% as a down payment. Before these new rules, mortgage borrowers who took a 5-year fixed-rate mortgage only had to qualify for the mortgage payment based on the interest rate they were getting. Now with the new rules, you’d have to qualify for a rate at the Bank of Canada’s 5-year fixed posted rate, which is currently 4.64%. The new rules aim to make sure that if interest rates ever go up and are much higher than they are today, homeowners will still be able to make their payments. But the result is also an approximately 20% decrease in the amount of mortgage money available to borrowers.  One factor that you can focus on that is within your control to maximize your affordability: your credit score. A higher credit score could result in a higher