New Mortgage Renewal Policy : No Stress Test Required

2024-11-29

Since November 21, 2024, a newly implemented government policy has brought great news for those considering mortgage renewal. Now, when transferring an existing mortgage to another bank under the same terms, borrowers no longer need to undergo a stress test.

What is a Stress Test?

A stress test is an evaluation process that determines whether you can still afford your loan if interest rates rise. For example, even if your actual interest rate is 4%, the previous requirement was to assess your repayment ability at 6% (4% + 2%). This meant that if you didn’t meet this stricter qualification, you couldn’t switch your mortgage to another bank.

What Has Changed with This Policy?

Now, if you transfer your existing mortgage to another bank under the same conditions, you won’t need to go through a stress test. Instead, approval will be based on the actual interest rate applied to your mortgage.

How Does This Benefit You?

If you’re approaching mortgage renewal, you now have more flexibility to shop around for lower interest rates. Banks, in turn, will likely increase competition by offering better rates and terms to attract more customers.

Are There Any Things to Watch Out For?

If you plan to increase your mortgage amount or extend your total repayment period as part of the renewal process (which would be considered refinancing), you will still need to pass a stress test.

With this recent policy change, those renewing their mortgages now have more options and greater flexibility.

If you’re nearing your mortgage renewal and wondering whether these changes apply to you, consult a mortgage expert to explore the best possible terms for your situation.

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