Last week, Finance Minister Jim Flaherty announced changes to the rules of government-backed insured mortgages. These rules were designed to ensure that homeowners don't risk their financial security by buying more than they can afford.
The new mortgage rules come into effect on March 18:
- Mortgage amortization periods will be reduced from 35 years to 30 years. This means, monthly payments may be more, but Canadians will be able to decrease the amount of interest paid on their mortgages.
- The Maximum amount Canadians can borrow to refinance their mortgages will be lowered from 90% to 85% of the value of their home. This will allow homeowners to save through home ownership.
- Effective April 18th, the Federal Government will withdraw its insurance backing (Canada Mortgage and Housing Corporation) on lines of credit secured on homes, such as home equity lines of credit.