The Death of Zero Down Mortgages In Canada

As of July 11th the Gov’t of Canada has tightened the rules on government backed mortgages. 

There are five  major changes to the mortgage rules.

1/ No more Zero down. You will need a minimum of 5% downpayment to purchase a home. If you need to buy Zero Down you can still do so and must close the property by Oct. 15th.

2/ 40 years amortizations have been pared back to a maximum of 35 years amortization.  Ammortization is the period of time over which you retire your complete mortgage debt and own your home outright.

3/ You will require a credit score minimum of 620 to obtain a gov’t backed mortgage. Your credit score must be consistent and documentation will be required to prove that the valuation of the property is a reasonable one.

4/  No more government backed interest only mortgages.

 Meaning no mortgages where there is no principal paid in the first few years.

5/ A maximum of 45% of a borrower’s income can be used to retire debt.  This means a combination of mortgage payments, car, credit card, student loan and other essential or fixed payments

These were the five major changes that affect First time home buyers primarily.

The Gov’t is prudently trying to avoid a mortgage meltdown similar to that of the U.S. markets.

At the moment in Canada mortgages in arrears are stable at 0.27% the lowest levels experienced since 1990 and well below the highs of 0.65% in 1992 and 1997.

If your mortgage is coming due or you would like to have a mortgage review or mortgage debt consolidation please let me know. I will set up a time to meet with you and review your situation.  You can reach me at mytorontohome@gmail.com.

I am now affiliated with Dominion Lending as a Mortgage Broker.  We can now offer both Real Estate and Mortgage Brokerage services to all of our clients.

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