NEWSLETTER

July 10, 2008

The Department of Finance yesterday announced that it would change some of the rules for high-ratio mortgages, and that “these requirements will apply to all government-backed mortgage insurance policies (whether issued by CMHC or private insurers) for high-ratio mortgages on residential properties with up to four units.”

Here are some highlights of the changes:

1. Maximum amortization reduced to 35 years for new government-backed mortgages.

2. Minimum 5% down payment for new government-backed mortgages. Borrowers may borrow their 5% down payment, but it will not be insured under the new guarantee framework.

3. New credit score floor of 620 for new government-backed mortgages. There will also be limited exceptions to this rule, recognizing that there are some borrowers with credit scores below 620 that otherwise represent a low credit risk.

4. Minimum loan documentation standards “to ensure that there is evidence of reasonableness of property value and of the borrower’s sources and level of income.” The Department of Finance’s announcements today did not elaborate on this point.

5. No government guarantee for high-ratio mortgages where no amortization is required in the first few years. This includes high-ratio mortgages that begin with “interest-only” payments and HELOCs.

6. Maximum of 45% on borrowers’ TDS ratio for new government-backed mortgages.

These changes are slated to take effect on October 15, 2008. There is still a limited time for clients to obtain the zero down or 40-year products, if they so choose. Current 90 day pre-approvals would not be affected. Exceptions would be allowed after October 15th where they are needed to satisfy a binding purchase and sale, financing, or refinancing agreement entered into before October 15, 2008. Canadians who already hold mortgages will not be affected by these changes.

The Department of Finance stated that “today's announcement marks a responsible and measured approach by the government to ensure Canada's housing market remains strong and to reduce the risk of a U.S.-style housing bubble developing in Canada.” It also noted that mortgage arrears in Canada have remained low in recent years.

Shawn Kusch, AMP
Senior Mortgage Consultant - INVIS
www.shawnkusch.com
Tel: 604-598-9973
Fax: 604-598-9982
"low mortgage rates are just the beginning..."

May 2007

There is now a Tree Cutting Regulation Bylaw in Delta

In December of 2006, Delta Council adopted a bylaw requiring permits to cut trees in Delta. The purpose of this bylaw is to regulate the cutting and replacement of trees through a permit process. This bylaw requires a level of protection and replanting requirements that will help ensure the urban forest is preserved and maintained. Before cutting a tree, property owners are advised to review the permit requirements and exemptions. Details »

Conventional financing now available up to 80%
In the past in order for clients to avoid having to pay a CMHC/Genworth insurance premium for their mortgage financing they were required to put down at least 25% of the purchase price towards the down payment. Now with the recent changes in policies clients are only required to put down 20% of the purchase price for down payment in order to avoid paying any insurance premiums which will end up saving them money.

Amortization extension up to 40 years
Previously the maximum term a mortgage could be amortized over when determining mortgage payments was 25 years. However, recognizing that housing prices are continuing to increase...in an effort to make properties affordable for clients to purchase into the lenders have now supported amortization extensions up to as high as 40 years. By extending the amortization will lower a clients monthly payment obligation and therefore even though the property values have increased, with the extension of the amortization this will allow clients to be able to afford that property and won't have to settle for a property of lesser value or be forced to consider moving away from the lower mainland.

An example would be if a client qualified for a $300,000 mortgage based on a 25 year amortization...when extending the amortization to 40 years the client will now qualify for a mortgage as high as $361,000. On the flip side a payment for a $300,000 mortgage based on a 25 year amortization would be approx. $1,787.75 however by extending the amortization to 40 years the monthly payment on the same $300,000 borrowed would drop to $1,485.24 per month...a difference of $302.51 per month.

If you require additional information please feel free to contact me anytime!

Shawn Kusch, AMP
Senior Mortgage Consultant - INVIS
www.shawnkusch.com
Tel: 604-598-9973
Fax: 604-598-9982
"low mortgage rates are just the beginning..."

Trisha Calam joins FinerChoice Team!

Darrell & Sharon are excited to announce that Trisha Calam, licensed Realtor has joined our FinerChoice Team.

Trisha has been a Realtor for several years.   She has assisted us with a number of buyers since joining Re/max Performance a year ago and we're happy to have her on our team!  She and her family live in Surrey and she is involved in many aspects of the community including her current position as President of the Surrey/White Rock Ringette Association.  She will be focusing on working with Buyers in North Delta, Surrey, Cloverdale and White Rock.  We know that she will be a valuable asset to our team and to your moving experience!

CMHC's Flex Down Product
Released February 2004!
[Click on links below to access]

Flex Down Background
Flex Down Fact Sheet

Click Here for the Fraser Valley Market Report and Statistics.