Government of Canada Announces Changes to Mortgage Rules

mg_1200On January 5th, I wrote about the Minister of Finance’s concern over Canadians’ household mortgage debt, and how some changes to borrowing rules were probably in the works. Those changes were clarified and confirmed this morning. 

Per the Department of Finance’s website, here are the changes to mortgage rules that people in Edmonton and across Canada will face in the coming year:

  • Effective March 18, 2011, the maximum amortization period will be reduced from 35 years to 30 years for new government-backed insured mortgages that have a loan-to-value ratio of more than 80%. According to the government, this will reduce the overall interest payments that Canadians must make on their mortgage, which will free up more money to go towards principal.
  • Effective March 18, 2011, the maximum amount that Canadians will be able to borrow to refinance their mortgages will fall from 90% to 85%. According to the government, this will help Canadians save money through home ownership, while reducing the practice of packaging consumer debt into a tax-insured mortgage (e.g. home equity loan).
  • Effective April 18, 2011, the government will no longer insure lines of credit that are backed by homes (e.g. home equity lines of credit/HELOCs). According to the government, this will limit the number of Canadians who are using these taxpayer-insured funds for purchases unrelated to their home.

“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” Minister Flaherty stated in the government press release. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”

What this Means to Edmonton Buyers and Sellers

As noted above, these changes will come into effect in March and April of this year. So that means if you’re an Edmonton home buyer and seeking a 35-year mortgage, then you need to act quickly – before March 18.

For Edmonton home sellers, this means that – even in the middle of a cold Edmonton winter – this is a GREAT time to list and aggressively market your home, because there are going to be many motivated buyers who want to get a mortgage before the changes take effect.

If you have questions about mortgages or need to build your unique Edmonton home buying or selling plan, then call me at 780-709-0811. I have the information, resources and network you need to make these changes work for you­ – and not against you.

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The Proctor Team are very knowledgable, professional and know the market very well. We took Chris on a 1.5 year journey to find the right home for our family within the few neighbourhoods we wanted to live in . He was patient with us and we never felt the pressure to buy something and always waited for us to give us our opinion on a house before he gave us his. He also checked in on us if he did not hear from us in awhile and always kept us in mind when new listings were about to hit the market. He also threw out other options for us to think about i.e. building our own, meeting with builders etc. At the end, we bought a house that had yet to hit the market (and also was not completely done) and had the kitchen he knew I had been looking for :). He helped negotiate what we felt was a fair price.

Through the home buying process, it was evident he has alot of knowledge on what does and does not add value to a home, but also on what things to look for in a new home when it comes to construction and other details. He and Patti also sold our house. It was a unique property which made it a challenge to sell in the current market but Chris held open houses and also had the house staged at no extra cost. The initial photos were done quickly and beautifully. We felt Chris worked hard for us and treated us with respect. We look forward to bumping into you in the neighbourhood!


- Bonnie Islam

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