New Changes To Mortgage Financing Rules

New Changes To Mortgage Financing Rules

Federal Government Changes Mortgage Financing Rules

The federal government has announced changes to mortgage financing rules for
government-backed (insured) mortgages (less than 20 per cent down payment), which
will affect maximum amortization periods, mortgage refinancing, and home equity lines
of credit.


The changes announced by the federal government include:

. Reducing maximum amortization period to 30 years, from 35 years.
. Lower the maximum amount Canadians can borrow in refinancing their mortgages to
85 percent, from 90 percent, of the value of their homes.
. Withdraw government insurance backing on lines of credit secured by homes, such as
home equity lines of credit. This change would apply to Home Equity Lines of Credit
that do not amortize over time (i.e. borrowers are not required to make regular
payments on the principal amount of the loan). However, with established scheduled
principal and interest payments, a loan will continue to be eligible for government-
backed insurance, provided it meets the underwriting standards set by the mortgage

The changes to amortization periods and refinancing rules will come into force on March
18, 2011. The withdrawal of government insurance backing on home equity lines of
credit will come into force on April 18, 2011. Exceptions would be allowed after the new
measures come into force where they are needed to satisfy a binding purchase and sale,
financing or refinancing agreement entered into before the corresponding coming into
force dates.

Additional detail is available