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Flaherty Announces Mortgage Rules Changes

21 June 2012

Finance Minister Jim Flaherty has announced that the government is now tightening up their mortgage rules.

There are a total of 3 changes made to Canada’s mortgage rules:

  • The maximum amortization has been reduced to 25 years from 30 years.
  • They are also lowering the maximum amount you can borrow when refinancing a property from 85% to 80% of the value of their homes.
  • The last change as that government backed mortgage insurance will not be available for homes with a price of $1 million or more. This price is in fact the purchase price of the home.

What does this all mean?

In the end, it means that the government is worried about people over extending, which in my opinion a valid concern.

The adjustments made to the mortgage rules are perfect, in fact the 25 year amortization has been something I have heard and seen banks push clients to take. Although, now that it is set in stone, you have no choice but to take it – it really is for the better! ☺ If I recall correctly, just last year it was reduced to 30 years, and that is when I began noticing banks pushing people to take a lower amortization, specifically 25 years. This rule only has me wondering if we will see a push for 20 years now.

One other concern is that people will try to take advantage of the hot housing market, only to be burned. They will attempt to flip homes, and although there is a potential to make some money, there is a higher potential of it failing.

Does this make it harder to buy a home?

In my opinion, these changes should not have a huge affect on anyone purchasing a home. The changes made are not too drastic, they are just in place to stop you from over extending yourselves.

Which as we all know we can take quite far if someone doesn’t step in.

What do you think of these new mortgage rules?


About the Author


My favorite weapon of choice is the samurai sword. I use it to cut my chicken during dinner, cut my hair and periodically carve my name into stone when I am bored. I love meditating on top of a 15ft high pole and eating those sushi’s with smoked salmon on top. I love everything there is about Canada and everything financially related to Canadians. I write deily posts from Canadian Banks to Credit Card information.

Comments (1 )

LA Wrote:

Makes it more difficult for young or lower income folks to own their own home. Will probably result in more foreclosures as those who struggle to get into home ownership have to pay $100(s?) more each month and will be financially stressed that much more easily if general inflation occurs, or gas prices jump, or interest rates increase, or they lose a job, or an personal issue impacts them, etc.

Allowing 30 to 40 yr. mortgages with flexible, generous prepayment terms is better.

The bankers and Conservatives will talk a good talk, but they really don’t care.

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