Are you considering financing your new home purchase? If so, take notes...

The Canadian Federal Government is making significant changes to some controversial lending protocols in Canada. The primary changes are 1) the elimination of the 40 year amortization period and 2) the elimination of O% down mortgages. 

According to CTV News and many mortgage brokers, the intent behind this policy is to prevent a U.S. style market melt down. Right policy - wrong timing??? But it's better late than never.  

The impact of this move is also lessened by the fact that in Alberta, generally speaking, housing prices have become more affordable than last year. One of the reasons the 40 year amortization period was brought in was to deal with the rapid acceleration of housing prices.

A press release from the Government of Canada released on July 9, 2008 stated the new measures that were to be implemented on October 15, 2008 which include:

     - Fixing the maximum amortization period for new government-backed mortgages to 35 years;
     - Requiring a minimum down payment of five per cent for new government-backed mortgages;
     - Establishing a consistent minimum credit score requirement; and
     - Introducing new loan documentation standards. 

The press release also reassured home owners "these measures relate only to new, government-backed insured mortgages, Canadians who already hold mortgages will not be affected by this announcement."

For more information on the new mortgage constraints consult your mortgage broker.

To view the Government of Canada Press Release, click here: http://www.fin.gc.ca/news08/08-051e.html