Read the backgrounder. I read it as a requirement for non-amortizing loans to convert to retain government insurance.
Read the backgrounder. I read it as a requirement for non-amortizing loans to convert to retain government insurance.
Thanks - that clarifies things a lot.Originally Posted by CanadianCapitalist
It also indicates to me that this change is very minor, if most banks aren't getting insurance in the first place.
Mike Holman
Money Smarts Blog Investing and Personal Finance
What happens to the guy that took a 5% down mortgage for 35yrs and now has to refinance? After his 5yr term he won't have paid down 10% let alone be up to 15% of his house value.
We did a 35yr 10% down and after our 5 years we might not be at 15%(ignoring any extra payments, or house value increase). Do I just need to come up with this extra cash at renewal time now?
Get a 30 year amortization, or shorter....
I read this as if it was a down payment, not refinancing to increase your mortgage amount and put cash in hand.
absolutely not. your contract would not stipulate you needing to put more money down at renewal time, you just continue on.
remember, this is for new applications not existing.
Scotiabank offers a STEP mortgage up to 90% - can be combo mortgage + line of credit.
As you say, MOST banks go to 75 some even 65%. MCAP offers a HELOC to 80%. This HELOC change will not do much at all since most are not insured.
One thing I'm surprised about that isn't discussed is how come 5% cash-back mortgages are still OK? When the Gov't reduced the 0-down / 40-year, they allowed Scotia/National and Laurentian to provide "free down payment" mortgages which mean a client can simply "get" the 5% down from the lender, send it to the lawyer on closing, and pay it back (usually 2x more) with a higher rate.
Why is this ok?? I can't get an answer from my colleagues.
My friend did a 5% cash back with TD Bank ,they had to have the 5% down but got the down payment back 1 business day after the house closed.I can't understand how banks can do that either.
We have investment properties and we have to put down 20-35% once you own more than 2 homes.Most investors don't want to pay CMHC so doubt it will affect investors in the market.Probably the people who will be hurt are those trying to buy that first home.
I have never had more than 25 year amortization and I know many who had to take 35 year to qualify on paper but pay extra money each month and probably closer to the 20-25 year amortization .
I think a shorter amortization will take many out of the market who probably shouldn't be in the market. It shouldn't take more then 25 or 30 years to pay off your mortgage. If it does, then it's probably a little too tight for you buy at that time.
I've heard of a few people that did get the 40 year because they 'had to get in before they got priced out'. They were sure that their incomes would increase, so it was just a short term. Well, market prices have since gone down, one of them lost their job, and their lost everything.
I know there are exceptions, but I think having these stricter rules will help them in the long run.
For investors, well, I know we put more than the minimum down, and we just have to save more before we buy our next place.
Banks had no need to insure against the HELOC as long as CMHC was doing so for them. Unless i'm reading this incorrectly that is ...
My guess is that we'll see worse HELOC rates. The banks won't take a hit (ever) for the client and if they are forced to insure the additional loans people take out against the residence we'll likely see interest rates rise.
Seems logical to me ... but I may have missed something.
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