New rules for CMHC mortgages
March 25, 2010
The new rules for the government-backed insured mortgages, recently introduced by the Finance Minister Jim Flaherty, will take effect on April 19, 2010.
There are 3 basic changes to the existing rules:
1. Borrowers will now have to qualify for a mortgage based on the five-year fixed rate regardless of the type of the mortgage they will choose.
2. When refinancing the property, the owner can now refinance only a maximum of 90% of the value of the property instead of 95%.
3. If the property is purchased as an investment, the buyer will need 20% of the down payment to qualify for the government-backed mortgage insurance.
These changes have been designed to protect the home owners’ debts if the interest rates increase.
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