Happy Valentine’s Day! 

Today is Monday and, as you know, we use Mondays to discuss mortgages and financing your home. You may have heard already that the CMHC is implementing new changes to their mortgage rates and amortization period effective March 18th. 

In my opinion, these changes will effect only a small pool of people (mostly first-time buyers), but let’s do a rundown of changes to come: 

Here’s the low-down: 

Minister of Finance Jim Flaherty likely made these changes to further solidify the Canadian housing market. The changes are manageable and they’ll help you, the home owner, in the long-run.

Here are the 3 changes to be implemented:

  1. CMHC is going to remove 35 year amortization and reduce it down to 30 years. 
  2. When you refinance the value of your home (key work: refinance), you can only go to 85% of the value of the home, opposed to 90% in the past. 
  3. Removing the insurance on home-equity line of credits.
The reduction in amortization is not a big deal. You’re looking at a very small increase in the monthly payment, like $100 on a $350,000 mortgage with a 30 year amortization period instead of a 35 year amortization.
Refinance limits to 85% of your home isn’t really applicable to too many people. Not very many people like to refinance up to 90% of their home so this isn’t of concern to many people. 
Home-equity lines of credit were being used to buy luxury items opposed to consolidating debt. Canadians equity positions in their homes were starting to decrease, so this is the government’s way of keeping it under control. The only thing that’s up in the area is how the banks will react with conventional financing to supplement this type of lending. 

If you’d still like to sneak in before these changes are implemented, you’ve got about 1 month and 4 days to do so! 

Do you need to talk mortgages or real estate? 

Send me an email! 


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