Ottawa- The Globe and Mail Published Mon Oct 3 2016
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 percent of the purchase price but less than 20 percent must be backed by mortgage insurance. This protects the lender in the event that the home buyer defaults. These loans are know as “high loan to value'” or “high ratio’ Mortgages.
In situations in which the buyer has 20 % or more for a down payment, the lender or borrower could obtain “Low -Ratio” Insurance that covers 100 percent of the loan in the event of a default.
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Latest information on Canada’s New Mortgage Rules: