It’s important that you know as much as you can about the mortgage and real estate markets so that you can make acquiring a mortgage an effortless process.
The Canada Mortgage and Housing Corporation (CMHC) has recently announced some changes that will be made to the CMHCinsured mortgages. Effective April 19, 2010:
All borrowers must qualify for the five-year fixed benchmark rate regardless of term. The five-year benchmark rate is published by the Bank of Canada and can be found on their website. This will ensure that the borrower will still be able to afford to pay their mortgage should interest rates rise.
Any investment properties that aren’t owner occupied will require a 20% down payment of the homes purchase price. Therefore investment properties will no longer be insured by the CMHC and the borrower will need to acquire a conventional mortgage.
When refinancing borrowers are now able to qualify for just 90% of the homes appraised value in effort to help protect the equity that the borrower has established.
This is an attempt to protect borrowers from accumulating more debt than they can handle while also forcing the housing market to cool off after record-low interest rate.