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New Mortgage Rules Re-Visited

On April 19th, 2010, new “mortgage rules” were introduced by the Canadian government. But what are these new “mortgage rules” and how do they affect homeowners? Here is a quick summary;

New Mortgage Qualification Rate – For mortgage loans with a down payment less than 20%, mortgage lenders now have to qualify them at the Bank of Canada 5-year posted mortgage rate (currently 6.10%). This is probably higher than your actual mortgage rate, which means qualifying for a mortgage is a bit tougher.

Bigger Down Payments for Investment Properties – If you are buying a property for investment purposes, you now need to put 20% down. Before April 19th, you only needed to put down 5%. This will drastically reduce the number of speculators in the commercial markets.

Stricter Mortgage Rules for Stated Income Borrowers – If you are using stated income to qualify for a mortgage, you will also need to put down more equity. Unlike homebuyers who are using declared income, you need to put 10% down for home purchases (versus 5%) and can only get refinancing up to 85% LTV (versus 90%).

6 Responses to “New Mortgage Rules Re-Visited”

  1. Thanks for this post, I am considering talking about the same in my blog.

  2. I have 3 open bank credit cards, one of them I opened for my former home business. I had a couple of other accounts, but they were closed by the issuer last year, because I didn’t use them. The only problem I have with that is one of the cards was my oldest account, and had a relatively large available balance of $12,800. I know my credit score took a hit for a few months after those cards were closed, because my average card age and overall credit availability were lessened. Although I was not in the market for any new credit, I think that there should be a special notation on credit reports when cards are closed due to inactivity, and the credit score calculation formula adjusted not to reflect a higher debt to available credit ratio.

  3. Thanks-a-mundo for the post. Cool.

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  5. Cheers for this article, it was a great read.

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