Wednesday, February 17, 2010

Canadian Mortgage Lending Changes

From April 19th look out for new federal rules that may affect your next real estate purchase.

1. Lenders will have to now evaluate potential buyers based on the 5 yr fixed rate at the time of purchase. Even if the buyer decides to go with a different "type" of mortgage. This will probably only affect you if your Total Debt Service Ratio (ability to borrow based on the amount of debt you can reasonably carry) is on the high side. If you can get a good TDSR at the 3 year 3% then a 5 year rate of 5.89% might just nix your chances of getting a mortgage.

2. The government is lowering the maximum amount Canadians can withdraw when refinancing to 90% Loan To Value, from the current 95% LTV as a "forced savings" initiative. It's not a bad idea really, providing less exposure to people.

3. Investors will require a 20% down-payment on “speculative” investment properties. I'm not sure who will determine what speculative means but... if you're hoping to invest with 10% down better do it before April.

Of course there are always legal ways to get around these new scenarios.

1 comment:

pjeary said...

Great stuff. I can’t stand it when we see real estate again with only 1 generic picture in MLS and they wonder why their property isn’t being showed

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