Mortgage Financing Changes

On Jan. 17, 2011, Minister of Finance, Jim Flaherty, announced adjustments to the rules related to financing of insured (CMHC and Genworth) mortgages.

Effective Mar. 18, 2011, maximum amortization will be reduced from 35 to 30 years. The change is intended to reduce the total interest Canadians are paying on their mortgages, allowing them to build equity in their homes more quickly and pay off their mortgages before they retire.

The second change, also effective Mar. 18, 2011, lowers the maximum amount Canadians can borrow when refinancing their mortgages, from 90% to 85% of the value of their homes. This change promotes savings through home ownership, and limits the repackaging of consumer debt into mortgages.

The third and final change, effective Apr. 18, 2011, withdraws government insurance backing on lines of credit secured by consumers` homes (commonly known as Home Equity Lines of Credit).

At this point, no changes related to the minimum down payment have been announced, keeping the minimum D.P. still at 5%.

The rules are expected to support the long-term stability of Canada`s housing market and support hard-working Canadian families through home ownership:

"Canada`s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession," said Minister Flaherty. "The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future."

Source: Department of Finance Canada

 

 

 



### Posted on: February 01, 2011 by Tino Brelak.

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