June 29, 2012
Recently Finance Minister Jim Flaherty anounced changes to mortgage insurance rules that will take effect July 9th.There are only a few Polygon communities where you will need to take note and decide if you should hurry your purchase decision to meet the July 9th deadline.
Here are the key points to consider.
Will you close and move in to the home prior to the end of the year?
If the answer is no then you need not hurry to meet the deadline.
If the answer is yes, then it makes sense for you to consider if the benefits are there for you to speed up your purchase decision to meet the July 9th deadline.
How much downpayment do you have?
If you plan to put 20% or more down on the purchase of your new home then these new rules really don't apply to you.
The changes affect what are called "High Ratio" mortgages (any mortgage with less than 20% downpayment) and are those that require the loan to be insured by CMHC. If you plan to put less than 20% down, then these new rules apply to you and your home purchase.
If you plan to put less than 20% down, your purchase will be affected in the following ways:
1. After July 9th your monthly payment will go up. This has to do with the fact that the new rules require an amortization of 25 years vs. the 30 years that is acceptable today. This change means you will have to pay your mortgage off in a shorter amount of time which will increase your monthly payment. This can be positive or challenging for you. Ask our sales staff how this might relate to your specific new home purchase.
2. Prior to July 9th you will qualify for a larger loan amount than you will after July 9th all things being equal. Simply put, the banks are able to loan you more money today against your current income than they will after July 9th. This is a very important point to be aware of, as it may mean the difference between your ability to stretch to a larger home.
Visit a Polygon community this weekend and we would be happy to explain the changes in greater detail and help you decide whether a purchase prior to July 9th makes sense for you.