Here is a sure fire way to freeze up the economy

If you own a home or have ever purchased a home but did not have more than 20% to use as a down payment chances are that your mortgage needed to be insured by CMHC or another company.  Mortgage insurance helps banks and lenders in the event that you stop making mortgage payments and your mortgage goes into default.  The insurance premium charged by CMHC and others is passed on to you the borrower and can add up to 2.90% to your mortgage amount.  The largest insurance provider in Canada is actually the Canadian government through the Canadian Mortgage and Housing Corporation.  Yes you read that correctly.  The government charges banks insurance premiums that get passed to you so that if you default on your mortgage the government will ensure the bank doesn’t suffer a total loss.

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Residential Mortgage Rules Change – finally!

Recently the Government of Canada announced changes to the mortgage lending rules including:

– Maximum amortization for a mortgage is 30 years (down from 40 and 35)
– Refinancing a mortgage is limited to 85% of the property value (down from 90% and 95%)
– Lines of credit will no longer be insured by CMHC (this means that a bank will still provide a line of credit that will be limited to a maximum of 80% of the value of a property) Continue reading “Residential Mortgage Rules Change – finally!”