One week ago, the department of finance announced its latest round of mortgage rule tightening. The four rule changes are as follows:
- Reduce the maximum amortization to 25 years from 30 years.
- Lower the maximum amount Canadians can borrow when refinancing to 80% from 85% of the value of their homes.
- Reduce the maximum gross debt service ratio to 39% from 44%
- Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.
The reduced amortization and maximum debt service ratios will reduce the maximum mortgage and resulting home you can afford. These rule changes are coming quickly so if you’re looking to maximize your home ownership experience then you need to rush off to your mortgage professional to seal the deal. The official launch date set by Finance Minister Jim Flaherty is Monday July 9th. However, if your mortgage is CMHC/insurer approved by Friday July 6th then you have the remainder of this year to close the transaction. That gives you one week to put an offer on the home you’ve been eyeing and to secure your mortgage. Don’t delay, you may regret the consequences.