09/27/2024
If you have a mortgage coming up for renewal soon, you may want to shop around!
Competition is going to heat up!
If you’re renewing your mortgage without changing your amortization or principal, you won’t need to pass the stress test when switching to a new lender. Keep reading to find out why this is important!
The stress test works like this: lenders will use a qualifying rate of 5.25% or 2% above your contract rate (whichever is higher) to ensure affordability.
Why is this important? Before this change your current lender had an advantage and didn't need to be competitive with rates because they are not qualifying you at renewal time, they will send you a renewal that you could either accept or reject. If you wanted to shop around for a better rate, the new lender would have to qualify you using the stress test which puts them at a disadvantage.
With this new rule, as long as you meet the criteria mentioned above you can shop around with all lenders being on equal footing, which leads to competition, which leads to more choice and better options for you.
It’s always a good idea to explore your options when your mortgage is up for renewal.
Reach out if you have questions!
