Canada Mortgage Rules - New Mortgage Rules

The new Canada mortgage rules are creating some last minute shuffling of real estate portfolios with a new era of more responsible lending.
A confluence of factors is creating an urgency on the part of home buyers in Canada to act now before interest rates begin their awaited ascent.

In preparation of the coming interest rate normalization or hikes in Canada, many banks have already begun to ratchet rates upward. Over the last year, the Bank of Canada’s stimulus efforts have kept home mortgage borrowing costs at historic lows.

The new legislation that takes effect April 19, 2010 will impose tighter conditions getting a mortgage. For example, anyone that wants to purchase a home with less than 20% down will then have to qualify based on the posted rate for a five-year mortgage instead of qualifying for lower short rates. This especially affects first-time home buyers who are trying to capture the best interest rates and terms before things get harder.

New Canada Mortgage Rules include:

1. Borrowers have to be able to qualify for a 5 year fixed rate no matter what term they pick
2. The new refinance maximum is 90% of your home's appraised value
3. 80% maximum insured financing on rental properties

At least some of the considered measures did not pass legislation including minimum 10% down on 30 year mortgages etc...

Another factor that may influence the current positive real estate market in Canada is the coming HST or harmonized sales tax. Although the HST does not apply to the pre-owned home market, it does affect real estate commissions and other taxable closing costs which can add another $3,000 or more to buying a home in Ontario.

There are also rules that will require self-employed individuals to support their income claims with tax returns if they have been in business for over 3 years in some places. More details to follow on how getting a Canadian mortgage may be a little more difficult in the future.

One Canadian mortgage broker, First Class Mortgages Burlington, Hamilton Ontario is seeing an increase in self-employed individuals applying for an Ontario mortgage. For now, rates are low and it seems like a great time to buy.