Archive for October, 2016

Four Major Changes To Canada’s Housing Rules

Four Major Changes To Canada's Housing Rules - Photo

If you haven’t already heard, the Canadian Department of Finance made an announcement earlier this month outlining a handful of changes that will have an impact on the mortgage/housing market.

The Globe & Mail followed the announcement pretty quickly with a detailed breakdown of all the changes, and how the affects might be felt.

Below is a reposting of that article in full. Enjoy!


From the Globe & Mail, on October 3rd, 2016:

Four Major Changes To Canada’s Housing Rules

The Liberal government has announced sweeping changes aimed at ensuring Canadians aren’t taking on bigger mortgages than they can afford in an era of historically low interest rates.

The changes are also meant to address concerns related to foreign buyers who buy and flip Canadian homes.

Below is a breakdown of the four major changes Finance Minister Bill Morneau announced Monday.

The current rules

Buyers with a down payment of at least 5 per cent of the purchase price but less than 20 per cent must be backed by mortgage insurance. This protects the lender in the event that the home buyer defaults. These loans are known as “high loan-to-value” or “high ratio” mortgages.

In situations in which the buyer has 20 per cent or more for a down payment, the lender or borrower could obtain “low-ratio” insurance that covers 100 per cent of the loan in the event of a default.

Mortgage insurance in Canada is backed by the federal government through the Canada Mortgage and Housing Corp. Insurance is sold by the CMHC and two private insurers, Genworth Financial Mortgage Insurance Company Canada and Canada Guaranty Mortgage Insurance Company. The federal government backs the insurance offered by the two private-sector firms, subject to a 10-per-cent deductible.

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