The following information is courtesy of Kurt Henry - The Mortgage Centre
You probably have been hearing of the changes that CMHC is implementing on July 9, 2012 of amortization of CMHC insured mortgages. The changes made are:
- Maximum amortization for CMHC insured mortgages from 30 years to 25 years.
- Refinances for CMHC insured mortgages up to a maximum of 80% instead of the current 85% Loan to Value. (This does not include purchases. Purchasing a house with 5% down, and in some cases, no down payment has not changed at this point.
- The maximum GDS of 39% for CMHC insured mortgages/ Previously, the maximum GDS was 35% with credit scores less than 680, and 44% with a credit score greater than 680.
- Maximum TDS of 44% for CMHC insured mortgages. Previously the maximum TDS was 42% with a credit score less than 680 and 44% with a credit score greater than 680.
- Maximum purchase price on CMHC insured mortgages of $1 million.
This is the difference that the recent change of amortizations is making on CMHC insured mortgages; (CMHC is implementing the changes as of July 9th)
- A $200,000 mortgage with a 30 year amortization that gave a payment of $850 per month, will now be $955 per month with a 25 year amortization - a difference of $105 per month.
- A $300,000 mortgage with a 30 year amortization that gave apayment of $1276 per month, will now be $1433 per month with a 25 year amortization - a difference of $157 per month.
- A pre approval done with a mortgage amount of $200,000 with a 30 year amortization, would now be approximately $178,000 with a 25 year amortization - a difference of approximately $22,000.
A pre approval done with a mortgage amount of $300,000 with a 30 year amortization, would now be approximately $267,000 with a 25 year amortization - a difference of approximately $33,000.
Pre approved buyers should be getting offers accepted asap, in order to get the final mortgage approval if they want a lower payment or a higher purchase price than what they will be able to get.
Flaherty’s decision to tighten mortgage rules could take the heat out of a Toronto real estate market where average prices have surged by a third to $516,787 from five years ago and there are more skyscrapers under construction than any city in North America.
Samar Manuel - Real Estate Representative - Oshawa