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Canada Mortgage Rules Changes

Posted by Mark Sadiua on Friday, July 20th, 2012 at 1:57pm.

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.

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Re/Max, CREB Certified Condominium Specialist