The new lending rule changes on insured mortgages are:
- Maximum amortization changed to 30 years from 35 years
- Maximum advance on refinancing your home is reduced from 90% to 85%
- Government will no longer insure lines of credit, so that reduces HELOCs to 80% (conventional mortgage)
The only change that will affect a purchaser is the reduction in the amortization. A owner-occupied property can still be purchased with 5% down.
The changes for numbers 1 & 2, are effective on March 18th & number 3 on April 18th.
Most of my pre-approvals were done on the 35 year amortization period. We will be contacting all our pre-approved clients to advise them of the change & if this does affect them, they will have to make their purchase before the March 18th deadline. The closing can be after that date.
We anticipate our non-bank lenders, ING, Merix, First National Financial, Street Capital) will still lend up to a 35 year amortization on conventional mortgages as this change affects
High ratio insured mortgages only.
Last spring when the Government introduced the new qualifying rule on variable rate mortgages (having to qualify the mortgage at the Bank of Canada’s 5 years posted rate of 5.19% instead of the 3 year posted rate of 3.69%), these non-banks have continued to qualify their mortgages the old way on conventional loans.
The major banks for some reason had to apply the new rules to all types of mortgages.
If you have clients who could be affected by the change, they should be buying now. After March 18th, they could be looking at a cheaper property.
Bryan Guertin - Mortgage Consultant - Mortgage Intelligence
News Article from the Financial Times: http://money.canoe.ca/money/business/canada/archives/2011/01/20110117-075541.html
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