Ken Devoe – Red Deer Realtor

with Century 21 Advantage

New rules for mortgages

This morning there was an announcement regarding mortgages in Canada.This all started back in March with Finance Minister Jim Flaherty meeting with economists, in the meetings some of the big banks had some suggestions and below is the outcome of those meetings.

There are four changes that will affect you:

  • Reducing the maximum amortization period to 25 years from 30 years
  • Reducing the maximum amount of equity homeowners can take out of their homes when refinancing to 80% from the current 85%
  • Limiting the availability of government-backed mortgages to homes with a purchase price of more than $1 million
  • Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%

These changes will take effect on July 9th but if you are pre-approved right now you should be checking to see if you are affected.

From what I have read this morning this means that if you are signing a $350,000 mortgage at 4% the reduction of the 25 year amortization from 30 year will cost you about $177 more per month but will save you almost $47,000 over the lifetime of the mortgage. This could mean you would have to purchase a less expensive home right now but overall you would be saving.

My opinion:

1. The lowering of the amortization will create a problem for people buying who want a bigger home but overall these changes will save you money in interest charges.

2. The 80% refinancing will affect people who are taking equity out to do renovations and will make people tighten their wallets a little more on spending.

3. Limiting government backed mortgages for over $1,000,000 should not affect many people. I feel the people spending 1 million will have more than 20% down.

4. The debt ratio changes are minor and are there to protect the consumer from spending to much.

As these are my own opinions they are not meant to paint everyone with the same brush. Every situation is different, every household is different.

You should check with your mortgage broker to see how these changes affect you.

Thanks to Pam & Brandi at Dominion Lending for being quick this morning and informing us on the changes. If you need help with a mortgage please check out their website at and give them a call.

Thanks for reading

Ken Devoe – Century 21 Advantage

Follow me on Twitter @kendevoe


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Cell - 403-350-1192
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Ken Devoe is a licensed REALTOR ® with Century 21 Advantage in Red Deer Alberta

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