Mortgage Changes: What They Mean to You



    TORONTO, Oct. 16 /CNW/ -- There are some big changes that are affecting
the Canadian mortgage industry. If you are in the market for a new home, these
changes could impact you.
    In fact, with the changes that went into effect on Oct. 15, you may not
even qualify for a home mortgage.
    According to Nelson Abelha, president of Strategic Mortgages in Hamilton
and Toronto, there are five major amendments:
    1. Loan-To-Value Ratio. Previously, you had been able to finance 100
percent of the purchase price of your home. This is a 100 percent
loan-to-value ratio. Effective October 15, this limit was reduced to 95
percent, meaning purchasers require a minimum of a 5 percent down payment.
    2. TDS ratio. The maximum limit at 100 percent financing had been 40
percent. In the past, if you were applying a 5 percent down payment, the limit
was 42 percent if your credit score is below 680, and 44 percent if your
credit score is 680 or above. Under the new rules, the TDS is set at a maximum
of 45 percent.
    3. Amortization Period. The maximum amortization period for mortgages has
been reduced from 40 years to 35 years.
    4. Credit Score. A minimum credit score requirement of 620 is now
established. If you are currently in this bracket, make sure you begin
shopping for your home, and carefully manage your credit to increase your
score.
    5. Loan documentation. As a business owner or self-employed individual,
you are able to obtain mortgage financing by providing proof you have been in
business for two years via a business license or articles of incorporation or
GST returns. Your actual taxable income or net income is not used to calculate
your TDS ratio. Instead, a stated income is used based on your gross earnings.
This means the maximum mortgage you qualify for is based on your credit and
your down payment.  With a minimum of a 5 percent down payment, you are able
to purchase up to $700,000 without proving income as long as you meet the
credit score standard for this mortgage program. You decide whether the
payments are affordable.
    Abelha said that the best thing to do is check with a trusted mortgage
expert before you start looking for a home.
    For more information, please contact Nelson Abelha at Strategic Mortgages
at (905) 545-2838 or visit http://www.strategicmortgages.ca.




For further information:

For further information: Jennifer Wezensky of Strategic Mortgages,
+1-269-274-4071 Web Site: http://www.strategicmortgages.ca

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