According to The Department of Finance’s announcement, it has been changed some of the rules for the new high-ratio mortgages in Canada, which will take effect from October 15, 2008. According to the new mortgage policy in which the Government of Canada adjusted its minimum standards for the mortgage insurance guarantee framework, new mortgages with government-backed mortgage insurance policies whether issued by the Canada Mortgage and Housing Corporation or private insurers, the maximum amortization period will be 35 years, and the minimum down payment will be five percent (borrowers may borrow their five percent down payment, but it will not be insured).
Canadian Mortgage Rule changes highlight:
- Maximum amortization period has been fixed for new government-backed insured mortgages to 35 years.
- Minimum down payment of 5% is now required for new government-backed insured mortgages.
- Establishing a consistent minimum credit score requirement.
- Requiring the mortgage lender to make a reasonable effort to verify that the borrower can afford the his/her loan payment.
- Introducing lenders about new loan documentation standards to ensure that there is evidence of property value and the borrower’s sources and level of income.
Like most of the mortgage companies have already started working their maximum amortization to 35 years for new mortgages and so do the borrower start thinking their own way, where is a possibility the mortgage application mostly effected before implication date or after? but mortgage client is out in the market due to the favourable temperature and an interest rate which is already fixed by the Bank of Canada, and who knows what it’ll be after October 15.