| Mortgage Lending Changes Take effect April 19: Richard Batke - Invis Mortgage Broker |
On Tuesday February 17, Jim Flaherty announced some new changes to the qualification criteria for mortgages.
The changes seem to be in line with Canada's conservative approach to the economy, which proved to be very helpful in during the last year, but they do present some tightening on mortgage lending in Canada.
| Here is a summary of the changes: |
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Variable Rate Mortgages: Borrowers must qualify at the current 5 year fixed rate, instead of a 3 year fixed rate, which is lower. This will end the ability to qualify for a larger mortgage by choosing a variable rate mortgage. |
| Table 5, cell 1 |
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Rental Properties: For non owner occupied properties, the minimum down payment will be 20%, rather than 5%. Since about 40% of condo purchases are for investment purposes, one would think that this will have a local impact on the price of condos in Penticton, which is good news for buyers. |
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| However, you will only need 5% down if you are purchasing owner occupied rental properties, such as a duplex. Buying a duplex, triplex or quad-plex can be a great way to become mortgage free faster and increase your purchasing power. Houses with basement suites are also a great option. |
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Refinances: Taking the equity out of your home will be limited to a maximum of 90% Loan to Value, from the current 95%LTV. Although this will impact some borrowers, it is not that great of a change, and it does protect you if the value of your home decreases. |
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If you are wanting to access your equity, one of the most versatile ways to do it is through one of the Home Equity Line of Credit products that I have available with a revolving portion at Prime +0.5%, with a free legal and appraisal package. This option allows you to pay your equity take out faster and allows you to re-advance at will. Please feel free to contact me with any questions, and remember that if you will be affected by any of these changes, now is the time to act as the changes will be in effect on April 19, and some lenders may change their guidelines before that time. |
| More Information: |
National Post Article National Post Summary |
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Serving the South Okanagan, including: Summerland BC | Penticton BC | Naramata BC | Okanagan Falls BC |
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