How the new mortgage rules can impact how you can access your home’s equity and your next purchase.
Finance Minister Jim Flaherty recently announced some changes to mortgage rules in Canada that came into force on March 18, 2011. The 3 main ones that could strongly effect you are:
1. The maximum amount that can be borrowed when refinancing a mortgage is now 85% of your home’s value, down from 90%.
2.The amortization on purchases using less than 20% down payment is now 30 years, down from 35 years.
3. CMHC will no longer insure any HELOC (Home Equity Line of Credit) above 80% LTV.
With today’s attractive interest rates (which are continuing to inch up), this may be the time to maximize your opportunities before the new ceiling of takeouts comes into effect on March 18.
Some reasons to refinance include:
- Consolidating high cost consumer debt, such as credit cards, car loans or other personal loans;
- Undertaking renovations to improve your residence;
- Obtaining funds for investment purposes, financing a child’s education or helping them to purchase their first home;
- Breaking a closed mortgage and transferring to a new lender;
- Lowering your monthly payment to improve cash flow;
- Converting from a variable rate to a fixed rate mortgage or vice verse.
Refinancing your mortgage is a strategic financial decision that requires the assistance of a mortgage expert to get you the best deal from hundreds of options available. I can advise you on what penalties you may occur and if refinancing is indeed your best option.
Is NOW the Right Time to Refinance Your Mortgage?