Recently there were some major changes in mortgage rules handed down by the Canada Mortgage and Housing Corporation (CMHC). These new rules include:
1. For buyers who bring less than a 20% down payment to the table, the new maximum mortgage term is 25 years. Buyers who have a 20% down payment are still eligible for a 30-year mortgage.
2. The maximum gross debt service limit is now 39%, instead of the previous 44%.
3. When refinancing a mortgage on a property, Canadians will be limited to borrowing 80% – not 85%, as previously allowed – of their equity in the property.
4. Properties over $1 million now require a 20% down payment. CMHC will no longer insure mortgages for properties over $1 million without that 20% down.
The Star’s Moneyville blog has a good breakdown of how the new rules may affect you as a buyer or seller. What do you think of these new rules?