Do you know the New Mortgage Rules?

(July 11, 2012 )

The government has recently tighten the lending policies for mortgages, so do you know what they are?  Here is a summary from Paul Yeh, Manager of Residential Mortgages at Verico Clear Trust Mortgages:

New big changes are now in effect for high ratio mortgages (less than 20% down). In summary, those who are looking to purchase with less than 20% down will have a tougher time qualifying.

1. Maximum amortization for high ratio mortgages are now 25 years (down from 30). This means higher monthly payments - higher income.

2. High ratio mortgages are now limited to a maximum purchase price of $1Mil...lion.

3. If you're looking to take equity out of your home through re-financing, the loan to value ratio is now at 80% (down from 85%). This means, if the value of your home is $100K, and you have a 40K mortgage, you can only refinance and take out another 40K (total of 80K) to invest/renovations etc.