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Rick Persad
Rick Persad Add me on FacebookFollow me on TwitterView my LinkedIn profile Keller Williams Black Diamond Realty rick@rickpersad.ca Burnaby, BC Cell: 604-889-9421
Web: www.rickpersad.ca


New Mortgage Rules: New Outlook

You may have heard about the latest changes to Canadian residential mortgage rules, effective just last month. Why were the borrowing restrictions amended so soon after the last round of adjustments, and what do they mean to you?

To understand why new borrowing restrictions were put into place, consumers need look no further than recent reports showing that the average Canadian household now owes a record amount of debt in mortgages, loans and credit cards — a reported 148 percent of disposable income. To help control this debt, the government’s choices included either raising interest rates, or tightening borrowing restrictions. Having chosen the latter, the following are changes for homeowners and buyers:

1. New borrowers need to know that the maximum amortization period — the maximum amount of years it would take to pay off a government-guaranteed mortgage — has been reduced from 35 years to 30 years.

2. Current homeowners seeking extra funds through the refinancing of their current home may now refinance up to only 85 percent of their home’s value, down from the previous 90 percent.

3. The government will no longer insure home equity lines of credit, putting the responsibility on the lending institutions instead.

Overall, the rationale behind these recent changes reflects an attempt to keep interest rates low, allowing real estate to remain affordable for Canadians, without making it too easy to run up personal debt.

Thinking of making a move this spring or summer, and wondering how the new mortgage changes might affect your personal situation? Please call to discuss your individual circumstances, and to find out about housing trends and affordability in your particular area.

Rick Persad Keller Williams Black Diamond Realty 252 - 5489 Byrne Rd Burnaby BC V5J 3J1
Phone: 604-889-9421 Cell: 604-889-9421 Fax: 1-888-885-8971 Email: rick@rickpersad.ca Web: www.rickpersad.ca The above information is deemed reliable, but is not guaranteed. All dollar amounts in CDN unless otherwise specified.