Thursday, March 10, 2011 Federal Government Brings in New Mortgage Financing Rulesby Jules Seaman on Thu, Mar, 10, 2011 08:20 PM
In January 2011, the federal government introduced new rules for government-backed insured mortgages to help Canadians save more and spend less.
New mortgage rules
1. The government is reducing the maximum mortgage amortization period to 30 years from 35 years.
2. The government is reducing the maximum amount of the value of a home that can be re-financed to 85 per cent from 90 per cent.
3. The government will no longer provide insurance backing to financial institutions insuring home equity lines of credit.
"These are prudent measures that promote responsible lending practices and further strengthen our internationally recognized mortgage finance system," Jake Moldowan, REBGV Board president said.
Tougher rules are in response to recent warnings from the Bank of Canada Governor, Mark Carney, about rising household debt levels.
Key dates
Changes to the maximum amortization period and the maximum refinancing amount come into force on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes comes into force on April 18, 2011.
Exceptions to dates
When the rules come into force, exceptions will be allowed where they are needed to satisfy a binding purchase and sale, or a financing or refinancing agreement entered into before the corresponding enforcement dates.
How much will the new rules cost home buyers?
1. Reducing the amortization period to 30 years from 35 years
| Monthly payments and total interest savings resulting from a reduction in the amortization period to 30 years for a mortgage loan of $300,000 |
| Interest rate |
35 year amortization monthly payment |
30 year amortization montly payment |
Increase in monthly payment 30 year vs 35 year amortization |
Interest savings 30 year vs 35 year amortization |
| 4% |
$1,322 |
$1,427 |
$105 |
$41,850 |
| 5% |
$1,504 |
$1,601 |
$97 |
$55,404 |
| 6% |
$1,696 |
$1,784 |
$88 |
$69,809 |
2. Lowering the maximum refinancing amount to 85 per cent of the loan to value ratio.
• Home price: $300,000.
• Refinancing at 85 per cent: a home owner can access up to $255,000.
• Refinancing at 90 per cent: a home owner can access up to $270,000.
• Total savings in home equity: $15,000.
3. No government insurance backing to financial institutions insuring home equity loans.
To mitigate risk to the Canadian Mortgage and Housing Corporation, lenders now offering multiple loans or a multi-segment loans secured against a borrower’s home, will no longer be eligible for government-backed insurance. However, loans with established scheduled principal and interest payments will continue to be eligible for government-backed insurance.
Home buyers can still buy a home with a five per cent down payment.
For information, visit the Federal Department of Finance at www.fin.gc.ca. Go to News Releases (January 17, 2011).
This blog post courtesy of the Real Estate Borad of Greater Vancouver. For further information, please vist http://www.rebgv.org.
For information on Vancouver real estate listings, please contact experienced Vancouver Realtor Jules Seaman.
Friday, January 28, 2011 How Working with a Realtor Can Benefit YOUby Jules Seaman on Fri, Jan, 28, 2011 09:51 PM  Buying or selling a home can be one of the most important and complicated transactions you make in your lifetime. With this transaction comes plenty of paperwork, endless decisions to be made, and unknown obstacles. A Realtor can help you through the process of buying or selling a home from beginning to end, and ensure your financial and legal protection along the way. Realtors differ from other licensed or registered real estate agents or brokerages in that they are member of The Canadian Real Estate Association, and as such must adhere to the REALTOR® Code and Standards of Business Practice. These regulations, ethics and high standards ensure you will receive the best possible assistance while buying or selling your property. Below is an explanation of ways in which a Realtor can help you.
Skill
Realtors have professional marketing and negotiating skills that can help you buy or sell your home at a price that works for you.
Knowledge
A Realtor knows the ins and out of the industry and uses his or her education and experience to your advantage. In addition to their training, Realtors constantly update their knowledge through professional education programs.
Resources
Realtors have a plethora of resources at their fingertips, which can help you buy or sell a property faster and broaden your options. Realtors have access to the Multiple Listing Service; thus if you are buying a home, a realtor can find properties other Realtors are selling, or if you are selling they can list your home so other buyers can discover it through the Realtor with whom they are working. Realtors can also post signs which can direct buyers’ attention to a home that is for sale and being handled professionally.
Protection
Realtors must follow strict regulations and adhere to a code of ethics that is designed to protect you, the client. A Realtor is bound to client confidentiality and also must offer you his or her undivided loyalty; he or she must “protect the client’s negotiating position at all times, and disclose all known facts, which may affect or influence their decision.” Realtors must also “obey all lawful instructions of the seller” and “account for all money and property placed in a brokerage’s hands while acting for the client.” Furthermore, a realtor can legally incorporate a Property Disclosure Statement into a Contract for Purchase and Sale, ensuring you buy a home with full knowledge of any defects of which the seller may be aware.
For more information on how your Realtor can be of service to you, and further details on standards, legislation and requirements, please visit the Real Estate Board of Greater Vancouver website: http://www.rebgv.org.
For information on Vancouver real estate listings, please contact experienced Vancouver Realtor Jules Seaman.
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