Mortgage News Update – Changes in Canadian Financing Structure

February 17, 2010 in Announcements, Market News, News

As you may have heard this morning, Federal Finance Minister Jim Flaherty announced changes to mortgage insurance rules intended to come into force on April 19, 2010, as follows;

1. All borrowers must meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term –  As a TD Mortgage Specialist,  we already are in the practice of qualifying clients based on the 5 year fixed rate, and coach clients to structure their payments at this rate when opting for variable rate products, or shorter term mortgages.
2. The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one’s home – Very rarely will a 95% refinance situation come into play.
3. Non-owner occupied properties will require a minimum down payment of 20% – To avoid additional costs i.e. premiums, most clients have 25% for down payment on Income properties.  If a client only has 20% for down payment, the premium that CMHC charges is 2.5%. All income property qualifications are based on 25 year amortization. This has not changed.
4. There were not any changes to down payment requirements or amortization for owner occupied properties.