Federal Finance Minister Jim Flaherty announced changes to mortgage insurance rules this morning, which are set to come into force on April 19th, 2010.
This means the government will adjust the rules for government-backed insured mortgages as follows:
1. Instead of qualifying borrowers using a 3 year fixed rate, we will now be required that all borrowers meet the standards for a 5 year fixed-rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
2. The government has lowered the maximum amount Canadians can withdraw in refinancing their mortgages to 90% from 95% of the value of their homes. This will help ensure home ownership is a more effective way to save.
3. Borrowers will also be required a minimum down payment of 20% for new mortgages for purchases on non-owner-occupied properties.
At this point in time there were no changes to down payment requirements or length of amortizations for owner-occupied residences. If you are considering a real estate purchase, make sure you are well aware of the borrowing guidelines. If you have any questions, give me a call 604 616 2266.