New Mortgage Rules – What do they mean for you?

The Federal Government has spoken and decided that Canadians carry too much personal debt. As a result, they have mandated certain changes to CHMC (Canadian Mortgage and Housing Company) insurance. If you own a home or are looking to buy a new home, these changes may affect you. Here’s how…

If you are looking to buy a home you can still put just 5% down payment (in fact, with some lenders you can even put zero down) however, the longest amortization available through CMHC will be reduced from 35 years to 30 as of March 18th, 2011. What this means is that if you were looking to qualify for financing using a 35 year amortization, your purchasing power may be cut back using the new 30 year maximum amortization. Be sure to check with your mortgage broker about how to be pre-qualified and if these changes will affect you.

If you currently own a home and are considering refinancing your mortgage to consolidate debt, pay for renovations or get a better rate, the rules have changed on how much you can borrow. Until March 18th, 2011, clients are able to borrow up to 90% of the value of their home. With the new CMHC rules, a refinance can only go to 85% of the home’s value. What this means is that home equity will not be as accessible as it has been in the past.