New Mortgage Rules effective July 9, 2012

Last week, Minister of Finance Jim Flaherty announced four measures to become effective July 9, 2012,  for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent:

  • Reduce the maximum amortization period to 25 years from 30 years.
  • Lower the maximum amount Canadians can borrow when refinancing to 80% from 85% of the value of their homes.
  • Fix the maximum gross debt service ratio ( GDS ) at 39% and the maximum total debt service ratio ( TDS ) at 44%.
  • Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.