Dear friends, clients and interested home purchasers;
The Federal Government Finance Minister announced today there will be some significant changes made to mortgage regulations and these changes will start being enforced as of July 9th.
1. The maximum amortization for government insured mortgages will be lowered to 25 years from 30 years. There might still be some lenders offering higher amortizations on non-insured mortgages.
2. The maximum loan to value allowed for insured mortgages will now be 80% and not 85%. Again, there might be some lenders who will go to the higher loan to value and not insure the mortgage, but you will be paying a higher interest rate for this privilege.
3. The maximum mortgage amount that can be insured is now set at $1,000,000. Currently there is no limit put in place by the government. but some lenders already have their own rules on the maximum size of mortgage they will lend.
4. Maximum Gross Debt Service Ratio (GDS) will be set at 39% and the Total Debt Servicing ratio (TDS) will be set at a max of 44% for insured mortgages. The TDS is basically unchanged, but some lenders currently allow a GDS of 44% as well.
These new regulations are meant to curb Canadians borrowing and force them to build more equity in their homes. Gone are the days of no money down and 40 year amortizations which made it very difficult for Canadians to build equity in their homes and lead to irresponsible borrowing.
If you are anybody you know is considering purchasing a new home or refinancing their mortgage, these regulations could impact them. Although the official date these regulations will come into effect is July 9th, lenders and CMHC may start to enforce them unofficially earlier.
If you have any questions please do not hesitate to contact me!
JAMES R. METCALFE / REALTOR® BROKER
HELPING YOU IS WHAT WE DO
Thank you also to Brad Compton – Mortgage Agent / Invis Mortgages