Federal Government Changes to Mortgage Lending
Federal Government has announced action to restrict mortgage credit. Beginning July 9, 2012 the new mortgage rules will take
affect. The new measures include:
- The maximum amortization on a
prime mortgage will be reduced from 30 to 25 years.
- Mortgage insurance will not be
provided for properties valued over $1 million.
- Refinancing has been lowered
from a maximum of 85% loan-to-value to a maximum of 80% loan-to-value.
- The maximum gross debt service
(GDS) and total debt service (TDS) will be limited to a maximum of 39% and
44% respectively. Currently, GDS does not apply to qualified borrowers with
credit scores over 680.
How does this affect you?
This affects purchasers with
less than 20% down payment
You will now qualify for
A family with $65,000 in income
and no debt with 5% down could previously buy a home for
about $525,000. Now they can only spend about $410,000
*Using today’s 3.09%.
This qualification would be significantly less if you choose a VRM
(variable rate mortgage) or term of less than 5 years
For more information, here’s
the government’s Q and A document:www.fin.gc.ca/n12/data/12-070_2-eng.asp
you are considering purchasing a new home or refinancing/renewing your current
mortgage, I highly recommend you act before July 9th!
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