MORTGAGE INSURANCE RULES ANNOUNCEMENT
February 16, 2010
Please find below the outline of the changes coming into affect April 19th. As with all our communications, feel free to cut and paste our information for your own marketing purposes, we're here to help.
This morning, Federal Finance Minister Jim Flaherty announced prudent changes to mortgage insurance rules intended to come into force on April 19, 2010. The Canadian Association of Mortgage Professionals (CAAMP), were actively engaged in the discussions around these changes and they are as follows
All borrowers must meet the standards for a 5-year fixed rate mortgage even if they choose a mortgage with lower interest rate and term.
(The maximum amount one can withdraw in refinancing their mortgage will be reduced to 90%, from the current 95% of the value of one’s home.
Non-owner occupied properties will require a minimum down payment of 20%
There were no changes to down payment requirements or length of amortizations for owner-occupied residences.
In conjunction with CAAMP, we will continue to monitor developments including transitions rules.
What does this really mean?
This is all very positive news for the real estate market. Amortizations continue to remain at 35 years and minimum down payments have not changed for owner-occupied properties and remain at 5%.
As far as borrowers having to qualify based on a 5-year fixed, we are going back to the way borrowers had to qualify a number of years ago. Clients all had to qualify on a 5 year fixed payment even if they went with a shorter term or variable mortgage versus closed. This is a protective stance to ensure buyers can afford their monthly payments and are not putting themselves at risk.
Most lenders have already been qualifying clients this way and this change should not have a very strong impact on purchasers.
The changes to refinances will not affect purchasers unless they are looking to take out additional funds over and above the cost of the home which will now be to a maximum of 90% - not 95%.
Your Mortgage Professional,
Jared Dreyer, AMP
Call of Click 604 649-5991 www.dreyergroup.ca
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About Dreyer Group Mortgages, A Member of the VERICO Brokers Network
As a senior mortgage consulting team with extensive experience in the financial services industry and thousands of happy clients throughout the Lower Mainland, we understand what it takes to build long-term relationships through service and expertise. As an independent brokerage, we are not restricted to one financial institutions mortgage options. We provide the best range of financing solutions by accessing over 40 lenders and hundreds of products coast-to-coast.
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