The following changes to mortgage regulations for insured (CMHC or Genworth) mortgages will be taking place July 9th, 2012:
1. Lowering the maximum amount consumers can borrow when refinancing their mortgages.
This change will lower the maximum mortgage amount to 80% of the appraised value of the property from the current 85%. This change will help to promote savings in homeownership and encourage homeowners to prudently manage borrowings against their homes.
Reducing the maximum amortization period for new government insured (default insured) mortgages.
2. The maximum amortization for all new default insured mortgages will be reduced to 25 years from the current 30 years.
This change will help reduce total borrowing costs for consumers, helping them to build up equity more quickly and pay their mortgage off sooner.
3.Introduce a maximum purchase price for default insured mortgages.
This change will introduce a maximum purchase price of less than $1 million. This change ensures that government-backed mortgage insurance operates the way it was originally intended: to help working families and first-time homebuyers.
4. Introduce exception limits for GDS and TDS ratios for default insured mortgages.
This change will introduce a maximum GDS ratio of 39% and TDS ratio of 44% on an exception basis. This will assist in protecting clients who may be vulnerable to economic shocks or increases in interest rates.