Mortgage News: Amortization Changes & Interest Rate Update
This week there were two mortgage related headlines that we 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 less head lines than usual the Bank of Canada met and decided to keep the prime rate unchanged.
1. The Minister of Finance announced 3 changes to mortgage rules that will come into effect on March 18th, 2011.
2. Making less head lines 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.
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 effect
your mortgage. It will only effect 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 please call we'd love to hear from you. Call us anytime. 416.461.0204.
