New Rules for Mortgage Loan Insurance
The Government of Canada introduced new rules for mortgage loan insurance .
These rules will affect the qualifying interest rate for all loans and the eligibility requirements for loan with a loan-to-value ratio of 80% or less.
-Qualifying Interest Rate = greater of the mortgage contract rate or the Bank of Canada’s conventional five-year fixed posted rate
Starting November 30,2017 there will be 7 new eligibility requirements for loan with a loan-to-value ratio is 80% or less.
-Loan Purpose purchase of a residential property. No refinance
-Maximum Amortization 25 years from when the loan was originally made
-Maximum Purchase Price less than $1,000,000
-Variable Rate Loan if the loan agreement allows the fluctuations in the amortization period as a result of a variable rate of interest during the term, the loan payment must be recalculated at least every five years to conform to the original amortization schedule
-Credit Score at least one borrower ( or guarantor) must have a minimum credit score of 600
-Debt Service Guidelines max 39%/44% based on the greater of mortgage rate or the Bank of Canada conventional five-year fixed posted rate
-Occupancy if the property is single unit, it will be owner occupied
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