Mortgage restrictions come into play in October

The days of 40 year amortization and zero down-payment have been eliminated.

Mortgage guidelines have been tightening since the economic crisis in 2008. The days of 40 year amortization and zero down-payment have been eliminated.

We will see more restrictions in place by October 31, 2012 for major banks and to March 31, 2013 for other institutions.

One of the upcoming changes affects lines of credit (LOC), also known as home equity lines of credit (HELOC).  Currently the maximum HELOC amount is 80 per cent, this will drop to 65 per cent by above dates and possibly before. Similar to a mortgage, lines of credit are secured by your property. Lines of credit are open (able to lump sum or pay off at any time without penalty) with a variable rate, often as low as prime plus .50 per cent or .75 per cent.  Monthly payments can be as low as interest only.

The new rules allow for financing from 65 per cent to 80 per cent, but that portion must be as an amortized mortgage, therefore payments are blended, principal and interest.

All self-employed borrowers will be required to provide ‘reasonable’ income verification; stated income mortgages will be a thing of the past at mainstream lenders. Any cash back incentive cannot be considered part of the down payment, this will effectively eliminate 100 per cent financing.

Another change includes qualifying rates being toughened for conventional mortgages.  The qualifying rate for variable and fixed terms less than five years will be ‘the greater of the contractual mortgage rate or the five year benchmark rate published by the Bank of Canada’. This may push a small number of borrowers into five year fixed mortgages because they won’t qualify for shorter terms.

Anyone with a mortgage or line of credit or anyone contemplating obtaining a mortgage should meet with their advisor and review their net worth planning.  It doesn’t have to be a case of rushing to get into debt before the mortgage rules change, it should be a conscious review of your options, what works best for you, and a stable and comfortable future.

It can pay to book an appointment with a mortgage professional, to have a quick look at where your money is going, discuss what interest rates are up to, and determine if you are getting the most use out of your mortgage features.

 

For further information, Carol Plaisier, AMP, Mortgage specialist with Invis, can be reached at the DundeeWealth office in Parksville 250-248-2399, or by e-mail: carolplaisier@invis.ca www.carolplaisier.com.

 

 

Just Posted

Coombs farm auction returns April 28

CFI hosts 41st annual auction

Ballenas grad to perform opera and art songs in Parksville to fund Prague trip

UBC music student Juliana Cook was asked to study and sing in the Czech Republic

Qualicum Beach versus Parksville – who wins?

Councils could take part in first-ever lawn bowling challenge

Ravensong Waterdancers to get you in sync

Teams will perform 12 routines at watershow on April 28

Homeless activists outside Notre Dame demand ‘a roof too’

Wealthy people have donated millions to effort to rebuild cathedral after devastating fire

Sri Lanka invokes war-time military powers after nearly 300 killed in Easter bombings

Sri Lanka’s minister of tourism says 39 foreign tourists were killed in the Easter Sunday attacks

Man’s body found in popular Cowichan Valley hiking area

Police say death not suspicious after discovery in Stoney Hill area overlooking Saltspring Island

Multiple sailing waits as BC Ferries deals with Easter Monday traffic

89 extra sailings had been added to the long weekend schedule

Vancouver Island-based company provides glass alternatives to plastic straws

Enviro Glass Straws now producing more than 60,000 staws each year

Ex-mayor of northern village claims its drivers are overpaying ICBC $1,800 a year

Darcy Repen says data shows Telkwa households are being ripped off for car insurance

Deadly synthetic drug found in Kamloops that puts users in ‘zombielike’ state

Interior Health warning says substance causes ‘speedy, trippy-like symptoms’ and hallucinations

Trudeau to be portrayed on ‘Simpsons’ episode

Toronto journalist who’s posted videos of himself doing impressions of the PM voiced him for the show

Elizabeth May’s wedding dress a ‘walk through a garden’ on Earth Day

Green Party leader set to get married in Victoria

Most Read