Our Finance Minister just rolled out a second phase of new mortgage changes. I don't think they are going to have much of an effect on the overall market. They are really targeted towards that first time buyer who is trying to squeeze every last penny out of his qualification in order to buy that home. The 2 main changes focus on high ratio mortgages, which are down payments that are less than 20%. Firstly, the maximum amortization period is now 25 years down from the previous 30 years. Secondly, the maximum loan value is capped at 1 million. With a conventional mortgage (20% or more down) you can still choose 30 year amortization and of course there is no limit on what you can borrow based on your qualification. I think these changes are a good thing. Personally I believe that if a person has to squeeze every last penny in order to buy that home, which means amortizing the mortgage over 30 years instead of the standard 25 years, then that person really has no business buying a home right now and should stay renting. There are too many added costs with home ownership and lets face it, interest rates have nowhere to go but up. You should always leave yourself a financial buffer and have some extra cash on hand to cover any special levies, increases in property and utilities taxes, repairs, maintenance and a possible increase in your mortgage interest rate in the future.
This entry was posted on August 9th, 2012 by Owen Bigland | Posted in Video Blog