Canada Announces Tightening of Mortgage Rules

Date Published 6/21/2012
Author Marja Hoek-Smit
Country Canada

The federal Finance Department of the government of Canada announced on Wednesday June 20, 2012 that it will further tighten mortgage rules to address concerns over high Canadian household debt.

-The maximum amortization period for a government-insured mortgage, will be lowered from 30 to 25 years.

-The upper limit of the Loan-to-Value ratio will be dropped from 85 per cent to 80 per cent.

Buyers who purchase a home with a down payment of less than 20 per cent of its value are required to purchase government-backed mortgage insurance. The government has gradually tightened mortgage rules since 2008, when the maximum amortization period was 40 years and the maximum LTV was 95 percent.

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