Thursday, January 20, 2011

Finance Minister Jim Flaherty's Proposed Mortgage Changes...

Federal Finance Minister Jim Flaherty announced tighter mortgage rules on Monday to address concerns over high Canadian household debt.

I received many calls regarding the mortgage changes announced this week and the one question from most first-time condo buyers is "When are the changes taking effect?". Here is a brief summary...

The changes will be implemented in stages, the adjustments on amortization and refinancing limits are effective March 18 and the government backing on HELOCs will be removed as of April 18.

For some first-time buyers the window of opportunity to own a home will be restricted somewhat following this week's federal government’s announcement of changes to government-backed mortgages. The lending rules, as unveiled by Flaherty on Monday, could add an estimated $100 a month in carrying costs for future homeowners.

Effective March 18, the term of government-backed mortgages are being reduced to 30 years from 35 years. Flaherty also lowered the maximum amount of equity that can later be refinanced from 90 per cent to 85 per cent.

Finance Minister Jim Flaherty also announced that effective April 18, the federal government will no longer insure newly issued home equity lines of credit or HELOCs, although lines of credit issued before April 18 will continue to be insured.

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