Toronto Mortgage News
Mortgage News Toronto
There has been a lot of talk lately about the changes being made to mortgage rules by the Office of the Superintendant of Financial Institutions Canada or OSFI.
The largest concern was that upon renewal of the mortgage homeowners would have to requalify for their mortgage loan.
This would have forced thousands of homes onto the market as people’s situations change over the years.
OFSI has just announced today that mortgage holders in good standing will not have to be re-approved at renewal if they stick with their existing lender. This was the No. 1 industry concern in OSFI’s draft guidelines. OSFI says lenders can rely largely on people’s “good payment” records at renewal, which “is one of the best indicators of credit worthiness.”
Another update on the new Mortgage rules
The maximum loan-to-value on HELOCs will be cut from 80% to 65%. OSFI says, “HELOCs are inherently riskier products, given their revolving nature, persistence of debt balances and their ineligibility for mortgage insurance.”
A HELOC mortgage in case you don’t know is a home equity line of credit. 65% LTV will be a hard limit that applies to all HELOC borrowers at all federally regulated lenders (i.e., it won’t be applied as a weighted-average on lenders’ portfolios). There’s no word yet on when HELOC changes will happen. “Later this year” is the most frequent guess we’ve heard from industry watchers.
So if you are thinking about a HELOC for your home you may want to do it now. There’s hope that this guideline will be limited only to the line of credit portion of readvanceable mortgages. In other words, there’s nothing to suggest that people won’t be able to get a 65% LTV credit line, plus a 15% LTV mortgage, for a total LTV of 80%. (We won’t know this for sure until the final guidelines are released.) Any questions just give me a Call.