Maximum Amortization Decreased to 25 Years

June 20, 2012

Amortization period changed from 30 to 25 years and maximum amount for a refinance decreased to 80% of your home’s value.

Things have been quiet from the government lately.
It has been a few months since I last heard rumors of mortgage rule changes to slow down the Canadian real estate market.
I was very surprised to find out that the federal Finance Department is announcing new rule changes. While I haven’t heard any specifics about the rule changes and when they will come into effect this what I do know:
1. The maximum amortization period for a government-insured mortgage is being lowered from 30 to 25 years.
2. A decrease that Canadians can borrow against their home equity from 85 per cent to 80 per cent.
The first change is designed to slow down the heated real estate market in Toronto and Vancouver. It will definitely affect the overall amount a borrower can qualify for and will prove to be very effective in keeping prices down as the purchasers buying power is being stunted.
The second change is designed to prevent people from using their homes as an ATM and limits the amount that a borrower can draw from their equity. 24 months ago it was possible to refinance up to 90% of your home’s value. Currently you can refinance up to 85% and the proposed change allows for a refinance up to 80%.
If you are currently thinking of stepping into the housing market or refinancing now would be a good time to contact a mortgage broker to position yourself going forward and figuring out how these changes will impact your financing. Overall this is a prudent decision by the Ministry of Finance and will help to keep the real estate market from over heating which isn’t good for anyone.
Please feel free to give me a call at 416.461.0204. I’d love to hear from you and be sure to include your email address in my sign up to get the latest mortgage news and talking points.


Christopher Molder

Mortgage Broker

Christopher is a mortgage broker based in Toronto, Canada. And a son of a broker too. He’s a second generation mortgage broker. Following in his father’s steps he joined the family mortgage business straight out of university.