Goodbye 40 years!
Bruce Schoenne
Jul 9, 2008 - 6:06:29 PM
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Say goodbye to the 40 year amortization period
The Government of Canada today announced significant changes to the rules governing insured mortgages.
In a bid to protect the Canadian housing market from a similar situation that has occurred in the US, CMHC will no longer be offering government backed 40 year amortization periods. The maximum amortization period is being reduced to 35 years.
The change is scheduled to take effect on October 15, 2008 and would allow existing mortgage pre-approvals with the common 90-day duration to be used or expire. Certain exceptions would also be permitted after that date.
Other changes to the government’s policy changes include a requirement for a minimum down payment of five percent, establishing a consistent minimum credit score requirement and the introduction of new loan documentation standards.
The Government calls today’s announcement a responsible and measured approach by the Government to ensure Canada’s housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.
As this announcement relates to new mortgages only, Canadians who already hold mortgages are not affected.
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