As of January 17th, 2011 new mortgage rules have been put in place by the Finance Minister to reduce household debts. What does all this mean?

How do the new mortgage rules affect home buyers?

  • As of March 18th, 2011 anyone purchasing a home to owner occupy with less than 20% down payment can only go up to 30 years amortization. This was previously allowed up to 35 years.
  • Based on a $200,000 mortgage amount, the mortgage payment difference between 30 and 35 years amortization comes to an estimated $76.00 per month which means $988.00 payment difference per year.
  • The amortization change made along with higher qualifying rate changes made back in April of 2010, reduce the amount of mortgage that individuals can qualify for.
  • Individuals can still put as low as 5% of the purchase price towards down payment on an owner occupied purchase.

 How do the new mortgage rules affect home owners looking to refinance?

  • New changes to mortgage lending now require current home owners that are looking to borrow against their equity to keep at least 15% of their home’s value. 
  • This means that up to 85% of current home value can be financed as opposed to the previously allowed 90%

 How do the new mortgage rules affect individuals looking to obtain secured line of credits?

  • Secured line of credits can now only be obtained on a conventional basis.  This means that an owner occupied property can be financed up to 80% of its current value to include a secured line of credit.