Are The New Mortgage Rules a Good or Bad Thing for First-Time Home Buyers?

Some of you may know that in July of this year major changes to the rules regarding Canadian mortgages were put into effect by the Canadian government. These new policies included a decrease in the maximum amortization period from 30 years to 25 years for mortgages insured by the Canada Mortgage and Housing Corporation, that lenders could allow home equity loans for up to 80% of a property’s value (reduced from 85% previously) and that homes worth more than 1 million dollars were no longer eligible for government insured (CMHC) mortgages (for example, anyone wanting to buy a home worth more than $1 million must now have a down payment of at least $200,000).


For first-time buyers the biggest change was the shortening of the maximum amortization period from 30 to 25 years. Now, is that necessarily a bad thing? Perhaps not as this will force borrowers to pay back their debt sooner, thereby ultimately reducing the amount of interest they'll pay over the life of the loan, saving them thousands of dollars in interest costs over the life of the mortgage. However, the flip side of the coin is that the borrower’s mortgage payments will be larger as more debt gets paid back with each payment.

Some experts say that the new rules may help prevent first-time buyers from stretching themselves too thin, will allow them to build equity in their home faster and become mortgage-free sooner.

There is a great article in The Star which addresses the pros and cons of the new mortgage rules in Canada for first-time home buyers, to read the article click here.

Hope all of you first-time buyers find this article interesting and informative. If you have any questions about how the new rules may affect your new home purchase, please don’t hesitate to give us a call – we are here to help!

Until next time,

The Jamie Dann Team.

Good Mortgage Advice: Planning Ahead

Do you ever think about things you can do now to help protect yourself against the inability to pay your mortgage in case of financial issues in the future? The CMHC (Canada Mortgage and Housing Corporation) has posted an article on their website entitled “Mortgage Planning Tips” giving some great information about how you can be proactive now to possibly prevent damaging financial hardship in the future.

It is always wise not to borrow the maximum amount you have been approved for when it comes to a mortgage. Borrowing the maximum amount you can afford now may not allow you to comfortably cope with unexpected changes in your income or unforeseen expenses in the future.

It is a great idea to sit down with your financial lender to calculate how your monthly mortgage payment would change if the interest rates were to increase (even 1 - 2%) - Could you still comfortably pay your monthly mortgage if this increase should occur? – a very good question to ask yourself BEFORE “signing on the dotted line”.

There are ways to pay off your mortgage sooner in order to have more financial freedom in the future – this could include making weekly or biweekly payments, saving to make a lump sum payment toward the principle and/or increasing your payment a little bit every month. Talk with your financial lender about the options they offer to pay off your mortgage faster.

If you reach a point that you are unable to make your monthly mortgage payments, speak with you lender – they may be able to help you as they may offer ways to help you deal with temporary financial obstacles – Remember, the worst thing you can do is sit back and not do anything and just hope the problem will go away!

For more information regarding these Mortgage Planning Tips please click here to read the complete article from the CMHC.

Until next time,

The Jamie Dann Team

Barrie's Housing Market Outlook for Spring 2011

For those of you out there who LOVE statistics, the Canadian Mortgage and Housing Corporation recently released their review and predictions for Spring 2011 and beyond. The article states that given the amount of sales in 2010, 2011 is going to be a more moderate year - not as many listings, little to no price increases and much more of a balanced market. According to the report, sales shouldn't start to increase until late 2011 and into 2012. What I found to be interesting was the forcast that as the economy gets stronger in the next few years, along with the fact that more young adults will be moving toward home purchases, the occurance of first time buyers will increase.

This report says much more than I could write here, so, to check out the full document, click here.

Until next time!

The Jamie Dann Team

What is the CMHC?

Did you know that the Canadian Mortgage and Housing Corporation's  (CMHC) website is FILLED with tons of interesting articles?

The CMHC was developed as a government owned corporation in 1946 to address Canada's post-war housing shortage. Since then, the agency has grown into a National institution providing many mortgage loan insurance policies.

On their website, you can find many interesting articles about purchasing, maintaining, and renovating a home, as well as the obvious information about mortgages. They even have a great series of articles entitled "Home Buying Step by Step".

What we have also found really interesting is their Canadian Housing Observer which contains a yearly report of just about any statistic regarding housing trends and conditions, and outlines key factors that influence Canadian markets... To check out the Canadian Housing Observer for 2010 click here.

There is too much information contain in the CMHC's website to talk about here, but do take the time to explore it by clicking here.

Until next time,
The Jamie Dann Team