Recent Changes to Mortgage Lending Rules
You may have heard about the recent changes that the Federal Government has announced in order to try and curb mortgage credit. In a nutshell the four new rules are outlined as follows:
- Mortgage insurance will not be provided on properties valued at over $1 million
- The maximum amortization will be reduced from 30 to 25 years
- Loan-to-value ratios on refinances have been lowered from 85% to 80%
- The gross debt service (GDS) and total debt service (TDS) ratios have been capped at 39% and 44% respectively
These changes will come in to effect on July 9th and will only affect those borrowers who have less than a 20% down payment or equity in their home, commonly referred to as high-ratio borrowers.
If you have any questions about how these changes may affect you and your borrowing power please feel free to contact me and I can calculate the numbers as they apply to your personal situation.