New Changes With Canada's Mortgage Rules


Canada's housing financing rules for government-backed insured mortgages are going to be adjusted once again. Yesterday Jim Flaherty announced that these changes are to help hard working Canadians to not become overextended.

The 4 new measures below will take effect on July 9th, 2012.

  1. Since 2011, the current maximum amortization is 30 years which was at one point in 2008 as high as 35 years. Next month it will be reduced to 25 years again, which will result in someone paying off their mortgage faster and building more equity in their home.
  2. For home owners that want to refinance, the current maximum borrowing of up to 85% will be reduced to 80% of the value of their home.  This will help home owners maintain equity in their home and refrain from borrowing too much against the house.
  3. The maximum Gross Debt Service (GDS) ratio will be fixed at 39% and the maximum Total Debt Service (TDS) ratio will be 44% giving home owners some cushion for unknown potential increase in interest rates.
  4. The maximum purchase price for a government-backed insured mortgage is less than $1 million.

At the moment this will only apply to mortgages insured by Canada Mortgage and Housing Corporation (CMHC) but past trends do show that others will follow suit. 

Click here for more information.





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