New Mortgages rules in effect today, March 18th – Were you prepared?

Posted by under Mortgage News

Yesterday was St. Patrick’s day and today, March 18th, the new 2011 Mortgage Rules came into effect – either could have been the cause of a major headache. But maybe not – were you prepared?

A refresher on what the new rule changes means: mainly, that the maximum allowable amortization period on new mortgages will be reduced to 30 years from 35 years; effective on ‘high-ratio mortgages’ or mortgages with down payments of less than 20%.

Shorter amortization periods reduce the total interest paid over the life of a mortgage, but increase mortgage holders’ monthly payments. Is there a way to get around the new amortization standard? If you have a 20% down payment or higher (‘conventional mortgage’), you may be able to access a longer amortization period (it’s expected most of the major banks will continue to offer 35-year amortizations on conventional mortgages).

What are the other rules? 

  • The maximum amount that Canadians can borrow to refinance their mortgages was lowered to 85% of home values (down from 90%).
  • Government-backed insurance for lines of credit secured by homes has been withdrawn

These new mortgage regulations were introduced to curb concerns over high Canadian debt levels, which reached 150% of personal disposable income per average Canadian household at the beginning of 2011.

With files from

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