Archive for the 'Legistlation' Category
Finance Minister Jim Flaherty announced new rules aimed at preventing home buyers from getting into financial difficulty when mortgage rates rise. He announced three major changes to mortgage insurance rules which will affect all government backed insurance programs. {Mortgages with less than a 20% down payment require the mortgages to be insured with a mortgage insurer. The new mortgage rules affect such insured mortgages}
1. All borrowers will need to qualify at a five year rate regardless of whether they are choosing a shorter term or a variable rate mortgage. It is unclear whether this rate will be the posted or discounted rate as we await clarity for this question. {This is nothing new to the mortgage broker industry; we have done this for years to protect our clients}
2. Refinances will be limited to 90% Loan To Value (LTV) versus the current 95% limit.
3. Non-owner occupied properties will require a down payment of 20%.
The good news is that rumours of a required 10% down for new home buyers on their principal residence and a reduction of amortization periods to 30 years are not currently being introduced.
These rule changes are scheduled to take place as of April 19, 2010.
