This week, there were two mortgage-related headlines that I wanted to communicate to you.
1. The Minister of Finance announced 3 changes to mortgage rules that will come into effect on March 18th 2011.
2. Making fewer headlines than usual, the Bank of Canada met and decided to keep the prime rate unchanged.
What does this mean to you?
Of the 3 changes announced by Jim Flaherty, two are relevant and we have received a number of questions regarding them.
The first change is a decrease from the maximum amortization allowed in a CMHC insured (high ratio or greater the 80% loan-to-value) mortgage. Previously, we could qualify borrowers based on a 35 year amortization that will now decrease to 30 years. The effect is that borrowers will qualify for less mortgage money.
If you already have a high ratio mortgage at 35 or 40 years, this change will not affect your mortgage. It will only affect new borrowers who don’t have 20% down payment and are stretching to qualify. If you know of a first-time home buyer who is thinking of getting into the market this year, they may want to act before the changes take place.
The other change is a decrease to allowable refinance loan-to-values. Previously, you could refinance your home up to 90% of market value. In an effort to force Canadians to save and not use their homes as an ATM machine, the amount has been reduced to 85%. If you are currently in a situation where you feel that a refinance to a lower rate or to consolidate consumer debt is right for you then it would be a good idea to contact us to make sure that an opportunity doesn’t go by.
Mortgages are very dynamic and the guidance that we offer is based on the circumstances of each individual. If you would like to review your mortgage to make sure that you are still on track, we’d love to hear from you. Remember that the services of a mortgage broker like myself are free of charge to you.
You can contact me here or book a call directly into my calendar below.
