Yesterday (Feb 16, 2010), the Department of Finance in Canada announced changes to government-backed mortgages. There was talk that there would be changes in how much would be required for a down payment, or changes in the amortization period, but that never happened. The following changes were announced:
•Require that all borrowers meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term. This initiative will help Canadians prepare for higher interest rates in the future.
•Lower the maximum amount Canadians can withdraw in refinancing their mortgages to 90 per cent from 95 per cent of the value of their homes. This will help ensure home ownership is a more effective way to save.
•Require a minimum down payment of 20 per cent for government-backed mortgage insurance on non-owner-occupied properties purchased for speculation.
These changes will take effect as of April 19, 2010. The purpose of the changes is to help prevent a housing bubble, and to aid Canadian home owners from becoming overextended.
Here are two great websites to learn more about the upcoming changes:
Deptartment of Finance is where the changes are stated by the government, and
The CBC News which has a video that discusses not only the changes, but the differences between Canadian and US financing rules. There is a written article on the site as well.
Hope you find this informative!
Until next time,
Jamie
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