New Mortgage Rules

The federal government has introduced new mortgage rules that come into effect Monday with talk of curbing the overheating condo market being witnessed in cities such as Vancouver and Toronto

To summarize:
  • Maximum amortization period has been reduced from 30 to 25 years
  • Maximum refinancing has been reduced from 85% to 80% of the loan-to-value ratio
  • CMHC mortgages will only be available on properties purchased for less than $1 million
  • The gross debt service ratio is 39% (percentage of your total annual income needed to cover your housing costs)
  • The total debt service ratio is 44% (percentage of your total annual income needed to cover all your debts)

Those thinking of investing in the condo market will be most affected by the limit on amortization period. Capping mortgages at 25 years means that in many cases the investment math on rental condos will only work with a larger down payment... which is a good investment strategy to begin with.