New Regulations shouldn't be a mystery - Let us guide you in the right direction

New home buyers have a sea of regulations, rules and guidelines to wade through on their way to purchasing their dream home. Those guidelines have just gotten an adjustment as Finance Minister Jim Flaherty has tightened up mortgage guidelines. While changes have been expected, many industry professionals are relieved that the changes are relatively minor.




Which isn’t to say those changes aren’t important.





A 5% minimum down payment is still required.


There are ways to qualify for a mortgage without the savings in place based on clean credit histories and minimum beacon scores. Some lenders are allowing cash back programs to be used as the down payment though they will be subject to higher interest rates. Flex Down payment programs are also available to qualified buyers which will allow them to borrow the down payment from a line of credit, personal loan or credit card.


The total amortization period allowed on an insured mortgage (a mortgage over 80% o the purchase price) has been reduced from 35 years to 30 years. While this might mean you have a little less purchasing power, it is not a dramatic change and still above the 25 year amortization period which had been the norm until recently. The good news is that while it might be a hard pill to swallow up front, you’ll save a significant amount of money in interest costs.


For current owners, there are changes that you should be aware of as well.


Presently, home owners can refinance their property to 90% of the appraised value, but as of March 18, 2011 this will be limited to 85%. This means that once a home owner reaches a 15% equity position in their property it cannot be leveraged by restructuring their mortgage.

The new regulations also limit government insurance of home equity lines of credit to 85% of the value of the property. This is the least restrictive change for those wanting to get into the housing market and further clarification will be forthcoming from lenders and governing bodies. This change will be effective April 18, 2011.

It is highly recommended that you have an honest and open conversation with a mortgage professional who can help determine how these changes will effect your opportunity for buying or refinancing your home. As a consumer, you have a right to free consultations with a mortgage professional. At Signature Service Financial we have mortgage officers who serve Saskatchewan and Alberta.  We offer customized services that are tailored around your personal goals.   We’re here to help.