Thursday, July 12, 2012

New Mortgage Rules

The following rules will apply to purchasers and home owners requiring hi-ratio financing  [less than 20% down payment / equity].

The Federal Government announced this morning four new clampdowns on insured mortgages effective Monday, July 9th, 2012.

These changes include:

  • Reducing the maximum amortization period to 25 years from 30 years
  • Reducing the maximum amount of equity homeowners can take out of their homes when refinancing to 80% from the current 85%
  • Limiting the availability of government-backed mortgages to homes with a purchase price of less than $1 million
  • Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%

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