Effective March 18 2011, three new mortgage rules will come into effect, making it more difficult for new buyers to qualify for mortgage financing and for home owners looking to refinance. According to Jim Flaherty, Finance Minister of Canada, the new mortgage rules will “encourage hard-working Canadians to invest in their homes and their future”. Under the new mortgage rules:

1. Buyers who need the extended amortization of up to 35 years to qualify for a higher mortgage amount must qualify based on a 30 year amortization, meaning that buyers will now qualify for a lesser mortgage amount. Mortgages with amortizations longer than 30 years will no longer qualify for government backed mortgage insurance, which is required for buyers with less than 20% down payment.

2. The maximum amount Canadians will be able to borrow against their home (currently 90% of the value) will now be changed to 85%. This will affect home owners who will need to use their home equity to consolidate debt, buy investments, do home improvements, and more.

3. Home equity lines of credits will no longer be insured by government back insurance.

For more information on the new mortgage rules, check out the full press release or contact us!