Changes to Mortgage Rules effective from early July 2012.

Happy Friday Everyone


I hope you are all well, have had a great week and are looking forward to some fun and engaging events over the weekend. 


You may or may not have heard of the latest changes to the mortgage and refinancing rules coming into effect in early July. No doubt it is certainly going to have an effect on the property markets, especially first time buyers. I am meeting up next week with some of my contacts at various banks and mortgage brokers in the city to get the big picture. As soon as I have that I will be posting the details up for you all to digest. Here is just a few of those changes:

• The maximum amortization for insured mortgages or those with less than 20% down payment will be 25 years.

• Refinancing your mortgage just got a little tougher… the govt has cut back the maximum loan to value from 85% to 80%.  In other words, the govt is out of the insurance business when it comes to refinances since you can get a conventional mortgage up to 80% with no insurance.

• Fixed the qualifying Gross Debt Service Ratio (GDSR) to 39% and the Total Debt Service Ratio (TDSR) to 44%… no real changes here since very few lenders allowed anyone to go above 35% on the  Gross Debt Service Ratio (GDSR). Follow this link for a more in-depth explanation of GDSR.

• Home Equity Lines of Credit will be limited to 65% loan to value, down from the current 80% loan to value. (still not sure if there will be any grandfathering of existing lines but my guess is no)

These are just some of the highlights. Tune in later next week for more information and how it may affect you and the property markets generally. If you have any questions or concerns feel free to get in touch!