New Mortgage Rules

New Mortgage Rules

On February 16, Minister of Finance Jim Flaherty, announced some changes to mortgage rules for Canada. Overall they are not bad news for the industry and may help to safeguard Canadians.

The government has implemented three major changes. The first is people seeking mortgages will have to qualify at the prevailing 5 year rate. Currently, you only need to qualify at the 3 year rate. This change will give a bit of a cushion to consumers when rates go up. This change applies to all borrowers and not just first timer buyers as some media has incorrectly reported.

The second change comes into play when an existing home-owner wants to refinance their home. Under the old system you could re-finance up to 95% using CHMC, now the new limit is 90%. It’s never a bad idea to maintain some equity in your home.

The final major change applies to investors purchasing non-owner-occupied rental properties. They will now need a 20% down payment. The previous limit was 95%. Now this does represent quite a change and may have an impact on the invest market, short-term, until investor works out how it applies to their own situation.

All changes were designed to protect consumers from getting themselves into financial trouble. While I’m never a big fan of government interfering in the market place these changes are reasonable.

These changes will take effect on April 19, 2010.
Jamie Woodend
Sales Representative
Remax a-b Realty Ltd Brokerage
88 Wellington Street
Stratford, Ontario, N5A 2L2
519-273-2821 ext 229 Office
519-949-0345 Cell