The new mortgage changes, announced yesterday by Finance Minister Jim Flaherty, will take effect on April 19, 2010. These new changes are designed to support the long-term stability of Canada's housing market and continue to encourage home ownership for Canadians.

Here is a recap of the announcement:

1: Higher Qualification Rate:
Given the fact that interest rates are at all time lows, it has been a concern for over a year now that people are qualifying for more than they should be. As a result, all borrowers must now meet the standards for a five-year fixed rate mortgage even if they choose a mortgage with a lower interest rate and shorter term; I do this now for all my Buyers on their preapproved mortgages.

As a result of this change, based on the average home price of $337,000, a buyer with only five per cent down would require roughly $9,200 more in annual income to qualify. A buyer of a $200,000 home would need to earn $5,400 more.

2: Lowered Refinancing Loan to Value:
Maximum loan to value on refinancing owner occupied homes has so far been 95% for less risky borrowers. This is now being changed to 90% so that home owners keep a minimum of 10% equity in their homes should they decide to increase their mortgage to pay off other debts or cover other living expenses.

3: More Down Payment required for Investment/Rental Properties:
Minimum 20% down payment has been introduced for government backed mortgage insurance on non-owner occupied properties purchased for investment/rental purposes. Of course, in order to avoid paying default insurance premium 25% down payment would be required on these non owner occupied purchases.

The government is taking "pro-active, prudent and cautious steps" to prevent a housing bubble. Home purchasing still remains affordable for first time home buyers with the minimum down payment requirement still being at 5%. There were also no changes to the length of amortizations for owner-occupied residences.

Thinking of Buying or Selling a Home or Condo in Brampton, Caledon, Mississauga, Oakville, Toronto, or Vaughan?
Please contact:

Sara Kareer,
Your trusted friend in the Business

Sales Representative
Century 21 Millennium Inc., Brokerage

(tel) 905-450-8300
(toll-free) 1-888-450-8301
(web) www.SaraKareer.com
(web) www.century21.ca/sara.kareer

Follow me on:
Facebook: http://www.facebook.com/sarakareer
Twitter: http://twitter.com/sarakareer