 The new mortgage rules − what they are and what they mean to you. The Canadian Government has introduced new rules for government-insured mortgages (where the amount borrowed is greater than 80% of the appraised value of the home). These rules, which took effect on March 18th, were introduced to help homeowners by promoting responsible borrowing for what is likely their largest purchase.
The new government measures are meant to encourage homeowners to increase their home equity, and to protect against risks related to carrying too much debt. The chart below explains just a few of the new mortgage rules which took effect on March 18th, 2011, and what they mean to you. Learn more from the Department of Finance | Government changes: | What this means for you: |
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The maximum amortization period has been reduced to 30 years from 35 years, for new government-insured mortgages with loan-to-value ratios of more than 80% (i.e., the mortgage amount is over 80% of the appraised value of your property purchase). | - A shorter amortization will help you pay off your mortgage sooner.
- You save money with fewer mortgage interest payments over time.
- You will also build up equity in your home more quickly.
| The maximum amount Canadians can borrow when refinancing their mortgages has been lowered to 85% from 90% of the value of their homes. | - This is to safeguard your hard earned equity and promote saving through home ownership.
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