It is said that first-time homebuyers in Alberta and their real estate agents have been scurrying to complete transactions before the implementation of new rules that became effective earlier this month. The new regulations may have those new to the property market looking at condos or town homes rather than single-family homes. This is because it could become difficult to qualify for the mortgages necessary to purchase higher-priced residential real estate.
The impact of the new rules will likely have the biggest effect on young families who rely on single incomes. The government has implemented what it calls a stress test. Previously, a couple might have qualified for a mortgage on a $400,000 home with an income of only $80,000. Now, the incomes of potential home buyers are tested to see if they will still cope with mortgage payments if there is a 2 percent increase in mortgage rates.
The same couple may now struggle to qualify for a mortgage that is high enough. They may have to look at property in the $320,000 price range. Real estate agents report that many couples choose to wait an extra few years to save up until they have larger down payments instead of purchasing smaller homes.
Young families in Alberta who are planning to purchase residential real estate may benefit from consulting with experienced real estate lawyers early in the process. Having a legal representative to scrutinize transactions and the intricacies of legal documents for ambiguity and improper wording can prevent financial losses and expensive future litigation. Building a relationship with a seasoned real estate lawyer at this time may lead to a long-term professional relationship for further legal guidance and support in future real estate dealings.
Source: CBC News Edmonton, "First-time buyers, single-income earners take biggest hit with new mortgage rules", Lydia Neufeld, Oct. 17, 2016