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5 Jul

New Mortgage Rules and my Thoughts

General

Posted by: David Lloyd

New CMHC Rules as of July 9th 2012.

 

The sky will not be falling on the Kingston Housing Market any time soon. The New rules will likely slow the market somewhat and may stall home value increases but will not stop most people from buying. They rules all in all are not a bad thing for the market. Also… Don’t forget, if needed i’m sure the 30, 35, and even the 40 year mortgages could return. But I wouldn’t hold my breathe.

 

Here are the High-lights:

 

Maximum Amortization Period

  • The maximum amortization has been reduced to 25 years from 30 years.
 

Refinance Maximum Loan to Value

  • The maximum loan to value for 1-4 unit residential properties will be reduced to 80% from 85%. 


Introducing a new Maximum Purchase Price

  • The maximum purchase price or as-improved value for purchase plus improvement loans cannot exceed $999,999.99 (must be less than $1 Million).

 


Maximum Debt Service Ratio Limits

 

For clients with beacon scores less than 680

  • The maximum Gross Debt Service ratio (GDS) cannot exceed 35%.
  • The Total Debt Service (TDS) cannot exceed 42%

 

For clients with beacon scores equal to or greater than 680

  • The maximum Gross Debt Service ratio (GDS) cannot exceed 39%
  • The Total Debt Service (TDS) cannot exceed 44%


Note:

GDS = [(Principal+Interest+Heating+Municiple Taxs + 1/2 condo fee) / Gross income] * 100

TDS = [(Principal+Interest+Heating+Municiple Taxs + 1/2 condo fee + all other debts) / Gross income] * 100

 

These rules are subject ONLY to CMHC insured mortgages. For those with more than 20% down or in Equity we still have 30 year mortgages.

 

Any questions please feel free to ask