Understanding recent changes in the Canadian Mortgage market

A lot of mortgage brokers in Toronto don’t like to talk about the negative events that happened in the U.S with the “Sub prime Market”. In fact if you even mention the word sub prime around brokers or realtors a hush will definitely follow.

The US had a bad case of over lending. Canada has found a way to prevent this from happening on this side of the border. They’ve taken preventative measures to avoid over lending.

Before you were capable of obtaining 100% financing and in some cases 105% when you borrowed your closing costs as well. Lenders had the 40 year amortization in place for smaller payments and longer life’s to the loan.

They’ve decided to cut this off the market to help stabilize it here in Canada. They’ve taken the amortization periods down to 35 years from 40 and are only doing 95% loan to value on homes for credit worthy people.

In my opinion this was a great move. This helps people pay off their homes sooner and saves thousands of dollars in interest. It will stabilize the market and keep the values of homes up and prevent a bubble burst in the market like what happened in the US.