Last month our Minister of Finance, Jim Flaherty, announced a number of upcoming changes that will affect governement-backed insured mortgages for homebuyers in Ottawa. The mortgage rules changing in Ottawa are to help support the long-term stability of Canada's housing market and to continue to encourage home ownership for Canadians.
"Canada's housing market is healthy, stable and supported by our country's solid economic fundamentals," said Minister Flaherty. "However, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing."
As of April 19th 2010 the following adjustments will be in full affect:
1) All borrowers must meet the standards for a 5 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.
2) The maximum amount Canadians can withdraw in refinancing their mortgages has been lowered to 90% (from 95%) of the value of their homes. This will help ensure home ownership is a more effective way to save.
3) The minimum down payment for non-owner-occupied properties (investment properties) is 20% (up from 15%)
Last week there were a few more last minute changes that will affect self-employed individuals who stated as opposed to proved their income (via NOF's, T4's, etc). As of April 9th 2010 if you are stating instead of proving your income your max loan to value for purchases is being reduced to 90% (from 95%) and for refinances to 85% (from 90%). If you have been self-employed in the same business for more than 3 years you will not be able to state, but will have to prove your income. Commissioned income can also no longer be stated but must be verfied. NOTE: Many lenders may apply these changes prior to the April 9th deadline.
With mortgage rules changing in Ottawa it maybe be a good idea to re-visit your bank or mortgage advisor to review your current pre-approval situation - always better to be safe than sorry.
Do you think these changes will make it more difficult for 1st time homebuyers to enter the world of homeownership? Do you feel they will protect us (homebuyers) when interest rates do start to rise again?
(A big thanks to Dana Mason at Mortgage Alliance Real-T-Mortgages Inc AND Murray Groen at Mortgage Brokers Ottawa for their help and great information!)
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