Since the 2008 credit crisis, the Department of Finance has been steadily been
clamping down on mortgage lending. We have had 3 rule changes. 2008, 2010,
2011 and now a 4th round of mortgage restrictions set to take effect on July 9,
2012. Not much time to prepare for the upcoming changes.
The changes: In order to qualify for a prime CMHC Insured mortgage.
Maximum amortization lowered to 25 years from 30 years
Maximum refinance Loan to Value lowered to 80% of the value
of the real estate from 85%
Gross Debt Service Ratio (GDS) and Total Debt Service Ratio
(TDS) are limited to 39% and 44% respectively. Currently
qualified Borrowers with Beacon scores above 680 do not have a
Eliminate CMHC Insurance on any property over $1,000,000.
Today you can purchase a home with as little as 5% down, even
on the $1MM property. With the new rules you will need
$200,000 vs. $50,000.
If you have clients that are purchasing a home and need extended amortization
or an expanded qualification they need to have a deal in place by July 9, 2012
If they are refinancing their home to assist with the purchase of another
home or cottage later in the year, have them prepare financing now under the
old rules while there is still some time.
If you have a purchaser of a $1MM + home who may still require CMHC financing Act Now
Remember, 5% down payment financingis still available to qualified purchasers