Did You Hear The News?

If you were away for the summer and are just getting caught up on the latest real estate news, you'll be interested in hearing about the new borrowing regulations that came into effect on July 9th, 2012.

As announced by Jim Flaherty, Minister of Finance, The Canadian government put four new measures in place for new government-backed insured mortgages with loan-to-value ratios of more than 80 percent:

1. The new maximum amortization period is reduced from 30 years to 25 years for homebuyers who have a downpayment of less than 20 percent. This is the third adjustment to the maximum amortization period in four years. The maximum amortization period was set at 35 years in 2008 and further reduced to 30 years in 2011.
2. The new maximum amount Canadians can borrow when refinancing is reduced from 85 percent to 80 percent of the value of their homes. The purpose of this is to promote saving through homeownership and encourage homeowners to prudently manage borrowings against their homes.
3. The new maximum gross debt service limit is now 39 percent. The purpose of lowering the limit is to better protect Canadian households that may be vulnerable to economic shocks or an increase in interest rates.
4. Government-backed mortgage insurance will no longer be available for homes with a purchase price of more than $1 million.

Wondering how these new regulations will affect your borrwing plans? Please call for a no-obligation discussion today.