Time may be ticking for some of the current lending policies with CMHC and the “Banks”..
Yesterday Firstline officially dropped the hammer on their “Stated Income” and “New Immigrant” programs. In English, you now have to borrow based on your actual declared income, (Average of the last two years, line 150 on your notice of assessments), and must have a 2 year Canadian Credit score if you want a mortgage from CIBC’s Firstline Mortgages.
It looks like some of the Banks are not going to wait until April 1 2012 until Flaherty announces the upcoming changes for CMHC .
BMO was first out of the gate by restricting their new 5 year mortgage special to 25 year maximum amortization.
There is a distinct possibility that April 1st will bring some of the most significant changes to the current lending policies, which will affect a large percentage of mortgage holders, both current and future.
Here are a few that policies that could be affected:
1. Amortizations reduced back to 25 years, (The 30 year amortization may disappear)
2. The elimination of self-employed applicants over stating their income, beyond the 2 year average of line 150 on their Notice of Assessments
3. Elimination of New Immigrant Program
4. Establishing ceiling amounts for mortgages, ie $1,000,000, but this could filter down into the first time homebuyer market with lower ceilings in different markets
5. 5% Down could only be for 1st time home buyers once again, that existing homeowners may have to come up with 10% down on their next purchase.
6. 80% Conventional Mortgages could move back to 75%
Now please keep in mind that until CMHC announces any actual changes, these are all completely speculative at best, and it is not likely all of these may happen.
But one thing is certain at this point, and that is that we will likely see some form of changes get announced in April that will have some effect on some applicants qualifying for a mortgage.
References to CMHC needing to increase their $600 Billion Cap, are somewhat of a concern, however I would be very surprise if they do not approve an increase in that cap at the same time they announce the upcoming changes to the lending policies.
With this in mind, my very strong suggestion is, if a home purchase is in your near future, or you have a mortgage maturing soon, or you have debts, renovations or any other reason to consider refinancing your current mortgage, and any of those possible changes are a concern to you, then get your application in soon.
The self-employed applicants will likely be the most affected by these upcoming changes.
It is still status quo with most of our current lenders.
This is a perfect example as to why using an independent mortgage agent, with access to multiple lenders is your best option today, if one lender changes their policies, we likely have other lenders who may not have changed yet.
David Kendall
Mortgage Agent
License # M08004045
211 York Road, Unit 3, Dundas, Ont. L9H 1M9
OAC Mortgages Brokerage License # 10928
An independently owned and operated franchise of the Mortgage Alliance Network
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