Impact Of New Insured Mortgage Rules
“How Will The New Proposed CMHC Insured Mortgage Rules Impact You?”
In the next couple of months the latest changes to the insured mortgage rules are going to come into affect with the drop of the max amortization from 35 years to 30 years and the max loan to value on a refinancing action through an insured mortgage reduced from 90% to 85%.
This has been pretty front and center news over the last couple of weeks, but in the end how will it directly impact you and the market as a whole.
Industry experts are calling for heightened activity in the mortgage market prior to the rules going into affect as new and old mortgage holder race to get qualified based on the existing rules.
Whether that’s really going to happen or not is yet to seen, but I expect there is going to be a certain amount of increased activity for this time of the year.
In the end these are likely going to be permanent changes and will impact the way people are going to be managing their debt load and cash flow for many years to come. Even slight changes to the insured mortgage rules can have a significant impact on those individuals or families on a fixed income where cash flow is tight and difficult to free up for larger debt servicing requirements.
For right now, there is a window of opportunity to explore how the new rules will impact things you may be considering in the near term.
If you’re considering a mortgage refinancing and/or debt consolidation action, now is the time to crunch the numbers and see what options make the most sense. In many cases the 5% being lost on mortgage refinancing amounts will not allow enough additional funds to be made available and totally change the debt holders plan of attack to manage debts on a go forward basis.
Any shortfalls in financing caused by the rule changes will likely fall into short term, unsecured debt which will carry higher interest rates and are much harder to repay over time.
For those looking at purchasing a property, the change in amortization rules will have an impact on your cash flow if you were planning on getting a 35 year amortization under an insured mortgage. Once again, for some individuals, this particular rule change may stop them from purchasing a new home or their target home if they don’t get busy and get the transaction done before the rule changes.
Key point here is to take a bit of time right now and see how, if at all, these changes may impact you. If you need some help understanding the rule changes and/or want to work through some different scenarios to see how the numbers work out, give me a call and we’ll go through your situation together.
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About the Author Joe Walsh
I'm a Toronto Mortgage Broker that arranges mortgage solutions on residential and commercial real estate property. With over 30 years of mortgage financing experience, I'm able to quickly assess your financing requirements and provide relevant solutions for your immediate consideration. Joe Walsh Google+ YouTube Channel