Some consumers are still confused with the new mortgage rules that will be in effect on March 18th, 2011.
The last couple of years has brought some changes to our lending rules as a precaution to avoid what has happened to our neighbours down south (U.S.A). Maybe some can recall that amortization was up to 40 years and approximately a year ago it was reduced to 35 years, once again that has changed.
The changes are as follows:
- Maximum amortization is going to be 30 years for new insured mortgages where the loan is 80% and higher
- Maximum amount someone can refinance their home is going to be 85% of the value of the home versus the current 90%
There will be an additional change but it will be in effect on April 18th, 2011
- Non-amortizing secured home equity lines of credit known as HELOC will no longer be insured
The changes will not affect anyone who has an executed (signed) offer prior to the 18th of March regardless of when it closes or if it's still pending removal/waiving of conditions. It will also not affect those that have a signed agreement dated before March 18th to refinance their home,
Theses changes are not to make it difficult for people to buy, it is to help Canadians be able to keep their homes and have equity when they need to sell and upgrade or downsize. It will also make us more conscientious about focusing on paying our mortgage quicker rather than extending it and living with debt for many more years unnecessarily.
To learn more click here for CMHC's website.