FEBRUARY 16th, 2010
This morning, Canada's current Federal Finance Minister Jim Flaherty announced changes to mortgage insurance rules intended to come into force on April 19, 2010, as follows;
- All borrowers must meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term - Most institutional Lenders already are in the practice of qualifying clients based on the 5 year fixed rate, and coach clients to structure their payments at this rate when opting for variable rate products, or shorter term mortgages.
- The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90% from the current 95% of the value of one's home - Very rarely did a 95% refinance situation come into play.
- Non-owner occupied properties will require a minimum down payment of 20% - To avoid additional costs i.e. premiums, most clients have 25% for down payment on Income properties. If a client only has 20% for down payment, the premium that CMHC charges is 2.5%. All income property qualifications are based on 25 year amortization. This has not changed.
- There were not any changes to down payment requirements or amortization for owner occupied properties.