Every time the mortgage rules change we read information on the Internet and in the media. I receive calls from people asking me specifically how the rules will impact them and I encourage everyone to contact their mortgage planner (my phone and email are always on). Unfortunately the media do not always make it clear and asking questions from someone in the industry is always best. Also – bank personnel are not up to speed on the rule changes so be sure to talk to someone who knows mortgages.
I read an article this morning (and commented on my social network) about the impact of rule changes for investors. The new rule changes apply to high ratio mortgages or insured mortgages. Since 2010 investors have to put down a minimum of 20% to purchase a condo or house. Investors buying multi-family buildings (more than 4 units) require 25%-35% down. So the new rules for amortization don’t apply as the changes are for high ratio (less than 20% down). For these conventional mortgages the 30 year amortization and possibly longer will still be available.
In the case of a multi-unit building underwriting for these mortgages differs from residential. Lenders also require a larger down payment depending on the revenue generated by the building and the market valuation of the building. Typically I advise clients to insure the mortgage regardless of down payment because this gives them access to more lenders and more importantly lenders will offer a better interest rate if the mortgage is insured. In many cases the lenders will offer a 25 year amortization in exchange for the lower rate. So – once again the new rules imposed by the government last week may not really effect what is being offered to investors.
This is the main reason you need to have a mortgage planner review your investment portfolio to help you make informed decisions moving forward.