So the big announcement Monday was that under federal rules all CMHC mortages will now be reduced from 35 years amortization to 30 years amortization. As well Canadians can now only borrow a maximum of 85% when refinancing their homes down from 90%. So what does that really mean to the average consumer? Well for instance if you were planning on buying a home with a CMHC mortgage which basically means your are putting less than 20% down on your purchase this may affect you for the better. In the sense that while a longer amortization period lessens your monthly payments it really buries you overall with the amount of interest you have to pay over the life of the mortgage most especially in a 3 or 5 yr fixed interest term. You have a more difficult time building up equity and may be in for the long haul when it comes to being fiscally responsible in the future. It's really just another reason as to why Canada , Alberta primarily is much better off in the post recession time than our neighbours and many trading partners because we are much more fiscally responsible. While last year's interest rate hike slowed down the housing market and lagged the industry in general, Canada boasts a less than 1% default rate on mortage loans and came out much better than other nations from the sub-prime crisis and the heart wrenching amount of foreclosures that are happening daily to date in the U.S.
All the best in 2011
http://www.theglobeandmail.com/report-on-business/economy/housing/flaherty-details-new-mortgage-rules/article1872599/
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