Mortgage reforms alone won’t solve housing crisis, says Mortgage Professionals Canada CEO + MORE Oct 25th

More homeoweners opting for variable mortgages as the Bank of Canada continues to slash rates  Toronto StarBank of Canada reduces policy rate by 50 basis points to 3¾%  Bank of CanadaBank of Canada crashes GIC party, sends retirement savers packing: Jackson  BNN BloombergPosthaste: Canada’s interest rates could fall more than many on Bay Street think  Financial PostGas prices: Bank of Canada rate cut to raise demand and prices, analyst says  Yahoo Canada Finance

Recent mortgage reforms introduced by the federal government, while a step in the right direction, aren’t enough to fully address Canada’s growing housing affordability crisis, according to Lauren van den Berg, CEO of Mortgage Professionals Canada.

As many seniors know all too well, being “house rich, cash poor” is a common reality. You’ve paid off your home, and it’s worth a lot, but your monthly income doesn’t stretch as far as it used to. If you’re living on a fixed income, the thought of renovating your home can feel overwhelming. The costs? They can range from a few thousand dollars for basic upgrades to hundreds of thousands for more significant changes, like making your home more accessible. 

But just because you’re on a tight budget doesn’t mean you’re stuck with your dated décor and dysfunctional layout. There are options, even for those who can’t tap into a steady flow of extra cash. Let’s explore what’s possible.

Why traditional mortgages and HELOCs may not be the answer

For many people, the first thought when looking to finance home renovations is a traditional mortgage or a home equity line of credit (HELOC). But for seniors living on a fixed income, this may not be a viable option…

The Canadian mortgage stress test applies to anyone applying for a mortgage, refinancing their current home loan, or renegotiating the terms of their mortgage contract with a federally regulated lender. And while provincially regulated lenders have more flexibility when it comes to mortgage approvals, many still use the test to evaluate customers’ financial risk. This means that most home buyers in Canada are subjected to the stress test.

“It applies to everyone—you, me, first-time buyers and 10-time buyers,” says Maxine Crawford, a mortgage broker who serves the Greater Toronto Area (GTA) and elsewhere in Ontario. “That includes people who already own a home and need to refinance their mortgage.”

In spite of its broad application, many Canadians may not be aware of the stress test or don’t understand how it works. Here’s what you should know before you apply for your next home loan.

Resource highlight

You’re 2 minutes away from getting the best rates…

A bi-weekly review of the latest mortgage and real estate news, a recap of key headlines, and a preview of upcoming economic releases.