The new rules affecting low ratio mortgages or mortgages backed by portfolio insurance are effective from November 30th, 2016.
The following are new mortgage rules for low ratio mortgages, (Over 20% down payment = low ratio mortgage)
The new refinancing rules have been postponed to start taking effect on May 1, 2017,
New eligibility requirements for low-ratio mortgages to be insured will include:
- A loan whose purpose includes the purchase of a property or subsequent
renewal of such a loan;
- A maximum amortization length of 25 years;
- A maximum property purchase price below $1,000,000 at the time the loan
- For variable-rate loans that allow fluctuations in the amortization period,
loan payments that are recalculated at least once every five years to
conform to the original amortization schedule;
- A minimum credit score of 600 at the time the loan is approved;
- A maximum Gross Debt Service ratio of 39% and a maximum Total
Debt Service ratio of 44% at the time the loan is approved,
calculated by applying the greater of the mortgage contract rate or the Bank
of Canada conventional five-year fixed posted rate; and,
- A property that will be owner-occupied.
A benchmark test rate will be applied to qualify.
A $500,000.00 mortgage at an annual benchmark rate of 4.64% (This is a test rate) on a 25 years amortization will require a monthly payment of $2,806.41
A $500,000.00 mortgage at an annual contracted rate of 2.39% on a 25 years amortization will require a monthly payment of $2,212.53. (This would be the real payments)
What should you do at this moment?
There is no one single financial move as each borrower has different needs and different circumstances, however with you should apply on line now or call or text 416-262-7139and request a confidential one on one meeting to look at specific answers and help you get the best mortgage deal. Delays to take action may cost you! Don’t delay!
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