Readers, before I discuss the mortgage rule changes for CMHC, I wanted to kindly ask that you take the time to vote me for my nomination of Top Canadian Investing Blog! I am down to 6th place and only you can make a difference. If you enjoy my blog, please give me a vote!
CMHC Mortgage Rules Change
Jim Flaherty, Finance Minister, made a recent change to the CMHC insurance rules which will see the following adjustments in July.
- For anyone with less than 20% down, you won’t be able to get a 30 year amortization since CMHC won’t insure it. Your maximum amortization will be 25 years. The result of this change will prevent new home buyers to purchase a home without a higher monthly payment. Only 2 outcomes can mitigate this on your end: a salary increase or a higher down payment.
- A home equity line of credit will be limited to 80% of your house value where by it previously was 85%. This will limit the borrowing power of home owners for potential speculative real estate investments.
- On homes valued about $1 million, no CMHC insurance will be available. No big deal apparently since CMHC has barely needed to provide insurance for such homes in the past. What it does is officially put a ceiling on it to ensure high income earners with no assets don’t borrow more than they should.
- Housing payments (including mortgage, heating costs and maintenance fees) cannot go above 39% of your income. Also known as your GDSR – Gross Debt Service Ratio. My Own Advisor had a post on it.
- Total debts (mortgage, car loan, credit cards and other loans) can’t exceed 44% of your income. Also know as your TDSR – Total Debt Service Ratio.
For my posts on mortgages, see my Mortgage page on the menu bar.
Some weekend reading to share …
- Boomer & Echo with ‘Building Your Retirement Income Plan‘
- Beating The Index with ‘Shoreline Energy: Dividend Sustainability Analysis‘
- Canadian Finance Blog with ’Emergencies, Money and You‘
- Dividend Ninja with ‘XBB vs. XSB‘
- Dividend Monk with ‘Two Investing Mistakes to Avoid, and Four Dividend Stocks to Look Into‘
- Freedom Thirty Five with ‘Financial Lessons from Ben Franklin’
- My Own Advisor with ’History repeats…some ETFs seem like Mutual Funds to me…’
- Simply Investing with ‘Are You An Investor Or Speculator?‘
- The Loonie Bin with ‘Welcome IGM Financial’
- Young & Thrifty with ‘Financing Your Home Purchase‘
Have a nice weekend & don’t forget to vote for me @ Top Canadian Investing Blog!
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