The federal government’s deadline is coming up fast. As of March 18th Canadians will no longer be able to refinance up to 90% of the value of their homes. It is being reduced to 85%, meaning that 15% of your home equity will become ‘untouchable’. In addition, the maximum amortization on ‘all’ mortgages will be reduced to 30 from 35, further tightening the housing affordability index.

On a $300,000 property this will mean $15,000 less available to payoff consumer debt. If your current mortgage equals 85% of value, then you will no longer qualify for a refi.

Effectively, only those with conventional loans 80% or below can refinance. The move comes at a bad time, since property values have levelled off, and may not increase much in the next 5 years or so. So this is your last chance to pay off that consumer debt.

We certainly hope that the government does not move to make the minimum down payment 10% instead of 5% because it is totally unnecessary, but it could happen. A very popular move would be for them to legislate lower interest rates and fees on credit cards, giving people a better chance to pay down high interest debt.

So those of you contemplating buying a home and want to take advantage of the maximum amortization giving you the minimum payment, then you should buy a home before March 18th.

The prospect of increased interest rates now appears all but certain this year so once again, take advantage by acting now while it is a ‘buyers market’, and make the best deal you can. Call us today, and we will get you the lowest rate possible. 

About a year ago, the bank arbitrarily sent a letter to Cindy and Len telling them they were raising their line of credit which was collaterized against their Guelph home from prime, to prime plus one per cent. We have written about this before; clients have no protection on these collateral mortgages as the bank can in its power, raise their rates. Well, when you think you have an agreement people don’t take too kindly to the rules changing but Cindy and Len thought, oh well, we still have a pretty good rate.

But then Cindy went in for a RV loan. The bank said no problem and came back with a rate of 9% with payments of $1300 per month. When Cindy reacted negatively, the bank came back and said okay we have “good news for you” we can do it for 7%. Now Cindy reads us faithfully and remembered how we wrote that the bank will try to sell you a product at the highest rate. And with their line of credit with available balance, Cindy suggested to the bank that she could put the purchase of the RV on her line of credit. “yes, we can do that for you”. the bank agreed. Hmm”, thought Cindy, my bank of 20 years does not act in my best interests. Well that’s when Cindy called us.

We gave her our best rate on a mortgage on the phone without hesitation and she asked to come in and speak with us. We discussed various options, variable vs fixed, short vs longer amortization and prepayments of the various lenders with the Guelph couple. Len was still not sold. He was not sure of “mortgage brokers” and told Cindy he wasn’t doing a thing unless he talked to the accountant he had for 30 years. His trusted accountant told him he had the same distrust of mortgage brokers but thought when he bought a condo last year he would give them a try. He told Len, he got a better rate and a better expereience than when he had dealt with the bank and recommended he go with us. With the accountant’s blessing, Len and Cindy got a new variable rate mortgage at 2.3 % from us with the RV and their home included at a new mortgage payment of $650. They are RV’ing to Florida next week, and are very happy campers.