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21 Jun

"Oh Sh$t Balls" in response to July 9th Mortgage Changes

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So the phones are ringing, the emails are flying and the tweeps are twittering.  This morning Mr. Flaherty made the following announcement to change mortgage regulations in Canada effective July 9th:

• Reducing the maximum amortization period to 25 years from 30 years

• Reducing the maximum amount of equity homeowners can take out of their homes when refinancing to 80% from the current 85%

• Limiting the availability of government-backed mortgages to homes with a purchase price of less than $1 million

• Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%

One of the many advantages of using a mortgage broker is that my clients, most immediately affected by these changes, were contacted by me this morning.  We discussed their personal situations and we how we can protect them from these new rules during the transition.

My client Mr. X said it best, “Oh Sh$t Balls”.  In his circumstances, if he does not find a new home, get his offer accepted and his mortgage approved by July 9th he will need to start shopping all over again.  This time he will be looking at homes priced $70,000 less and his payment will be $315 more.  Crazy, right?

In fact, this may be a total game changer.  Now he might need to consider a Purchase Plus Improvements mortgage if he needs to buy a home that requires improvements to the property and have the cost covered by their mortgage payments.  Other people may need to consider securing a Home Equity Line of Credit now while they still qualify in case they need access to funds later for an emergency.

If you’d like to review your options or if you have any questions, please give me a call or send me an email, and I’ll be happy to discuss how these changes may affect your mortgage situation. It’s my job to ensure you have the best options and strategies available at all times.