Finance Minister Jim Flaherty has announced the fourth round of mortgage restrictions in four years.
Starting 18 days from now (July 9, 2012), those with less than 20% down payment will no longer be able to get a prime mortgage with:
- a 30-year amortization...the maximum will now be 25 years.
- a refinance to 85% LTV (LTV = Loan to Value ratio - basically the percentage of the value being borrowed)...the max will now be 80%.
In addition, the government will:
- Ban mortgage insurance on properties over $1 million - In other words, you may no longer purchase a property of $1MIL or more unless you have 20% down payment.
These rules are a “judgment call” says Flaherty. They’re meant to “lower risk” for taxpayers and curb excessive household debt, which is Canada’s biggest economic risk.
These are significant changes to Canada’s lending landscape.
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