Canadian mortgage changes

As a mortgage broker, when it comes to my client's finances I try to remain genuinely objective and look out for their best interest. Frankly, I don't agree with all the changes but I am glad to see that the Federal Government has finally introduced a couple mortgage changes such as reducing home equity lines of credit (aka HELOCs) to 65%.

I can appreciate that housing prices are outrageous in many parts of Canada but I think Quebec pricing remains fairly reasonable. For the most part I think appraisers in the Montreal area are "conservative" for the better. I'm curious to see the impact of the new rules here in the Montreal-area especially with the condo market.

By dropping amortization from 30 to 25 years it seems lower income earners will be eliminated from buying in the short term to medium term. This may not be entirely bad. On the other hand, I am most concerned about recent home buyers that put 5% down, took 30 year amortizations, fixed shorter terms (1 to 3 years) and incorporated lots of over-time and bonus income as part of their income calculations. I've blogged that repossessions in Montreal remains fairly low however I think in the coming years bank repossessions will grow. 

Mortgage Summer Refresh & HELOC Changes

Yes I know I’ve been bad lately with blogging. Believe me I’m not saying that mortgage news has been slow rather the opposite. Lots on the go and there is talk of more Government changes related to mortgages and HELOCs (aka home lines of credit). Presently, if you wanted to buy or refinance your mortgage and home of credit can be combined up to 80% LTV (loan to value). In other words, you can receive a combination of mortgage and line of credit up to 80% of the market value of your home. Hence the majority of that 80% on a home mortgage could heavily consist of a home line of credit. In an effort to lower Canadian debt the Government is implementing new mortgage rules. It appears we will still be able to attain the 80% LTV financing, through max 65% heloc and 15% mortgage. Interest only payments and no amortization schedule will remain.

Frankly, I’ve never been a fan of helocs. Taking on a home line of credit needs to be calculated and the rationale needs to make sense (ideally short term). Helocs in my opinion are too easily accessible and once loaded they harm your credit score. It is unrealistic for most people to pay off a 100k loaded heloc unless you refinance your home, sell or win the lotto. So yes, I partially welcome new Government change. This change is supposed to take place later this year and we await the final Government guideline.

If you have any mortgage questions let me know.