Ottawa is announcing the fourth change to lending rules in as many years. Beginning July 9th, we’ll see the following changes to the mortgage rules:
- Maximum amortization period on high-ratio mortgages – those with a down payment of less than 20% – is now 25 years. For down payments of 20% or more, the maximum amortization period will be at the discretion of the lender and it is likely home buyers will still have access to 30 and 35 year amortization periods.
- No CMHC insurance on home prices over $1M. This means if you’re purchasing a home for $1,000,001, you have to be ready to put down 20% or $200,000. Looking at a home that is $1,000,000 however, you can get away with a down payment as low as $50,000.
- Maximum loan-to-value ratio on a refinance will be reduced from 85% to 80%. For loan to value ratios over 80% historically, additional CMHC fees were incurred so many refinancers never went past 80% to begin with.
- Maximum gross debt score and total debt score to 39% and 44% respectively.
The changes are an attempt to curb rising house hold debt and cool the overheated housing market. For more perspective visit: