Federal Government Announces Changes to Mortgages

To address concerns about rising debt levels among Canadians, the federal government tightened the rules for mortgage refinancing and government-backed insured mortgages.

The new measures:

• Reduce the maximum amortization period from 35 years to 30 years for new government-backed insured mortgages with loan-to-value ratios of more than 80%
• Lower the maximum amount Canadians can borrow when refinancing their mortgages from 90% of the value of their homes to 85%
• Withdraw government insurance backing on lines of credit secured by homes, such as home equity lines of credit (HELOCs)

The adjustments to the mortgage amortization period and refinancing rules will start on March 18, 2011. The withdrawal of government insurance backing on lines of credit secured by homes will start on April 18, 2011.

If you have questions about these changes, please contact your London Life mortgage planning specialist.