Department of Finance has announced tightening on mortgage rules again. Below is a brief summary of the changes. We’ve seen this happen continuously over the past 4 years as the government tries to minimize overall household debt.
The following changes will be in effect July 9, 2012:
- Reducing max. amortizations to 25 yrs on high-ratios insured mortgages (meaning mortgages with less than 20% down payment or equity)
- Eliminating lending on high-ratio mortgages over $1 million
- Reducing the maximum amount for refinances to 80 % of the current market value. Currently that maximums is set at 85 %.
- Reducing the ratio’s that borrowers can go up to for mortgage financing overall.
Reducing an amortization for a $300K mortgage at 3.29% from 30 years to 25 years is a difference of approximately $156 per month.
Perhaps the government should finds ways of increasing the liquidity of consumers by changing tax policies, which are imposing taxes on Canadians at every turn.
In summary; if you are looking to purchase a home and need a longer amortization to qualify for the amount you need, act now.
If you are looking to refinance your home to access the maximum amount of equity, act now.
You have until July 9 to do this and as we get further communications from lenders on these changes, we will continue to keep you informed.