Thursday, June 21, 2012

Mortgage rules to be tightened further


Finance Minister Jim Flaherty has just announced sweeping changes to Canada Mortgage and Housing Corporation (CMHC) Canada’s national housing agency. CMHC is Canada’s premier provider of mortgage loan insurance, mortgage-backed securities, housing policy and programs, and housing research.

Buyers who purchase a home with a down payment of less than 20 per cent of its value are required to purchase government-backed mortgage insurance through Canada Mortgage and Housing Corporation. 

The 3 major changes are as follows;

1) A reduction in MAX amortization for CMHC insured mortgages from 30 yrs back down to 25 yrs.  This is will result in Canadian home buyers paying less in mortgage interest payments over the course paying off your home.  The downfall is that fewer people will qualify for a mortgage as the payments will be higher, and more income will be required to qualify for a mortgage.

2) Homes priced over $1 million are no longer eligible for CMHC insurance.

3) MAX refinance has been reduced from 85% (Loan To Value) LTV to 80% LTV.

The changes will be phased in quite soon on July 9, 2012 

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