New Mortgage Rules

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:

  • 1.Maximum amortization for CMHC insured mortgages from 30 years to 25 years.
  • 2.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.
  • 3.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.
  • 4.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.
  • 5.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 a payment 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.

 

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