Ottawa is reducing the maximum mortgage amortization period to 25 years from 30 years, and the maximum amount of equity homeowners can take out of their homes in a refinancing is being reduced to 80 per cent from 85 per cent.
Reducing the amortization period will increase monthly payments, but reduce the amount of total interest paid on a mortgage. Ottawa expects the change from a 30-year to 25-year amortization will, on a $350,000 mortgage loan at four per cent, increase the monthly payment $177 but reduce total interest costs by nearly $47,000.
1) Amortization Period is REDUCED to 25 years for less then 20% downpayment. Banks can continue to offer 30 year amortization on LTV’s 80% or less
2) Refinancing is REDUCED from 85% Loan To Value to 80%
3) Limit GDS to 39% and TDS to 44%
4) Homes above $1 Million must have 20% downpayment
How Will These Changes Affect You?