Canada Mortgage Change Rules
Amid rising concerns regarding household debt in Canada, the Federal Government announced that it is reducing the maximum amortization for government-insured mortgages to 25 years from 30 years.
• Now if you refinance your mortgage you can borrow up to 80 per cent of its value, previously you could borrow up to 85% of your home’s value.
What Does A Shorter Amortization Mean?
• The amortization period is the length of time it will take to pay off an entire mortgage. With a shorter amortization, you can save thousands of dollars in interest costs and become debt-free faster.
Recently a poll conducted for a major Canadian bank by public opinion and market research firm Pollara found:
• Nearly half (49 per cent) of Canadians are unfamiliar with the new measures put in place by Finance Minister Jim Flaherty
• The majority of Canadians do not know the maximum amortization period for government-insured mortgages in Canada, with only 45 per cent correctly identifying it as 25 years
• Currently, one-quarter (26 per cent) of Canadians believe the maximum amortization period for government-insured mortgages is 30 years or more.
The poll also revealed how the new guidelines will affect buying intentions and behavior and found:
• 14 per cent of prospective home buyers say the latest changes make it less likely they will buy a new home in the next five years.
• 41 per cent of those still planning to buy in the next five years say these changes make it more likely they will spend less on a home than they would have otherwise.
• Nearly half (45 per cent) say it makes it more likely they will take out a smaller mortgage.