The new mortgage rules effective July 9th will have an impact on some buyers and those who need to refinance their home. This is the governments way of getting us to control spending with respect to home ownership – which is a good thing. However, be careful when reading everything on the Internet, the news and even from your bank teller. How the rules will truly effect you will only become applicable to you when you talk with your mortgage professional.
Main point – the new rules are relevant to CMHC insured residential mortgages. Not all insured mortgages and not commercial properties (those with over 4 units in a building).
Example – the rules apply to high ratio purchases – those who have less than 20% down payment. If you have 20% down payment (gifted from a family member, from your savings or RRSP or the sale of another property or inheritance) you can access longer amortizations over 25 years. That may make the difference in what you can buy – so check your options.
Special Note – we received confirmation July 5th CMHC will revise the rule with respect to pre-sale purchase. With a purchase contract dated prior to July 9th,2012 where closing is beyond December 31,2012 the application if approved with no changes will be honored under the old rules.
If you are buying an investment property (apartment with 5+ units) you can still get financing with an insured mortgage and up to 40 year amortization. Qualifying will depend on commercial underwriting requirements – but the point is that CMHC will still insure these kinds of properties – the new rules are for residential high ratio insured mortgages – not commercial.
If you are uncertain as to the CMHC rules and don’t trust what you are hearing from any sources – simply go to the CMHC website and give them a call on the phone.