Canadian Mortgage Industry Changes

Last week October 15th came and went and with it some very good changes to our mortgage industry. Specifically the end of 100% financing, and 40 year amortizations. The minimum beacon to qualify is now 620, and the TDS ratio is now at 45.

I have always felt it is better to put some money down when buying a home and now the minimum required is 5% down.

Traditionally mortgages were amortized for a maximum of 25 years. Over the past couple of years the options were increased to 30, 35 and even 40 years. This made it easier to qualify, however left little room for homeowners to make the adjustment to increased payments if the rates were to go up. The maximum amortization period for mortgages has been reduced from 40 years to 35 years.

The minimum credit score requirement is now 620. If you are close to that score either above or below and considering purchasing a new home soon there are a few things you can do to help keep your score above or bring your score above 620:
1) Do not have too many inquiries on your credit
2) Make all your payments on time
3) Keep your balances within their limits
4) If you do happen to have a collection, pay it off at once and fax your final release letter to Equifax and TransUnion.

If you do not know your score you can order it from Equifax online at Get Your Equifax Credit Report Now!

Under the new rules, the TDS is set at a maximum of 45 percent. TDS is the Total Debt Service Ratio which is your principle and interest payment plus property taxes and heat plus you debt payments divided by your income.


For more information on any of the recent changes please contact Gregory Barrow by phone at 416 807 7123 or by email at gbarrow@dominionlending.ca