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Thursday, 21 June 2012

New Mortgage Rules put simple

The Government of Canada has announced changes to government backed insured mortgages, effective July 9th 2012.

The New Rules are as follows:

  1. Amortization period is REDUCED to 25 years for high ratio applications. Banks can continue to offer 30 year amortization on LTV’s 80% or less.
  2. Refinancing is REDUCED from 85% LTV to 80%.
  3. Limit GDS to 39% and TDS to 44%.
  4. Maximum purchase price for government backed mortgage insurance is $1 million. Homes above $1 million must have 20% down payment.

Although these adjustments are in force July 9th, exceptions have been allowed on binding Purchase & Sale financing & refinancing agreements where the application is made prior to July 9th.

Any mortgage insurance application received after June 21st and before July 9th, that does NOT conform to the new guidelines must fund by December 31st, 2012.

To review this morning's Globe and Mail article click here.
To review the government press release and backgrounders click here.
To contact Minister Flaherty or your local MP CLICK HERE.
If you would like to talk to a mortgage PROFFESSIONAL click here.