As part of the Government’s continuous efforts to strengthen Canada’s housing finance system, the Honourable Jim Flaherty, Minister of Finance, today announced further adjustments to the rules for government-backed insured mortgages.
The Government is announcing four measures for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent:
Reduce the maximum amortization period to 25 years from 30 years. This will reduce the total interest payments Canadian families make on their mortgages, helping them build up equity in their homes more quickly and pay off their mortgages sooner. The maximum amortization period was set at 35 years in 2008 and further reduced to 30 years in 2011.
Lower the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes. This will promote saving through home ownership and encourage homeowners to prudently manage borrowings against their homes.
Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent. This will better protect Canadian households that may be vulnerable to economic shocks or an increase in interest rates.
Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.
Minister Flaherty said the new rules will take effect on July 9, 2012.
So what does this mean to you?
Based on previous history, pre-approvals currently with lenders that do not go live prior to July 9th will NOT be grandfathered and will be re-issued with 25 year amortization.
Live deals approved by CMHC prior to July 9th with dates of possession after July 9th will still have the option of 30 year amortization if needed.
So, if you are still debating about buying a home, you should call me to see how this might affect your buying power!
Sincerely,
Bob Alexander ( Accredited Mortgage Professional )
Verico Maximum Mortgage Inc
email: bob@mortgagedoctors.ca
phone: 403-241-3949
web: http://www.mortgagedoctors.ca
If you would like further information on how these changes might affect the Real Estate market please contact me.
Gord