Changes to mortgage rules will make it more difficult to buy a home!
If you have been thinking about buying your first home, the changes to the mortgage rules announced a few days ago could affect you. You may qualify for a smaller mortgage or your monthly payments for the home you choose could be larger. After July 9th, 30 year amortizations will no longer be available. The maximum amortization length will be 25 years.
As well, if you have been considering refinancing your home to make improvements or consolidate debt, you will only be able to re-finance to a maximum of 80% of the value of your home. Currently you can re-finance up to 85% of the value of your home.
Although the long term benefit is obvious (less interest paid to the bank over the term of your mortgage), the higher payments per month will hurt the average consumer with so many other monthly expenses like food and hydro going up at unpredictable rates.
If the government is worried about the amount of debt Canadians carry, they should be making it harder to obtain credit cards and eliminating the "do not pay for x number of months" plans. A home is equity and everyone needs a roof over their head. Credit cards can be, and are abused on a regular basis with purchases of non-necessities. As far as I am concerned buying a home at 4% interest over 30 years is a far better deal than paying off a 5000.00 balance on a credit card at 26% used for dinner's out, new shoes etc... Minister Flaherty should be re-thinking his tactics.
One REALTORS® opinion.