New mortgage rules impact young buyers
Finance Minister Jim Flaherty announced new mortgage rules in 2012 that will make it tougher for Canadians to purchase homes.
Published Thursday, June 21, 2012 5:55PM MDT
Last Updated Thursday, June 21, 2012 5:58PM MDT
It's a blow to thousands of young Canadians saving up to buy a home. The federal government is tightening up mortgage rules for the fourth time in four years. It affects all government-backed insured mortgages
It is getting harder to qualify for a mortgage because the maximum length of an amortization period is down to 25 years from 30 years.
Here are some of the other changes:
- The total debit service ratio, that's the amount of your income that goes toward paying down all your debt, is now fixed at 44 percent.
- The maximum amount of equity homeowners can pull out of their home if they refinance has been reduced from 85 percent to 80 percent.
- Government-backed insured mortgages are only available on homes valued at less than one million dollars.
If the rules had been in place just days ago Yemi Adetona wouldn't have been able to buy his home. He called his mortgage broker Thursday morning to make sure his 30 year mortgage was still okay, it was.