1) Lowering the maximum amount consumers can borrow when refinancing their home
This change will lower the maximum mortgage amount for refinances to 85% of the appraised value of the property from the current 90%. This change will help to promote savings in homeownership and ensure that homeowners don’t become overextended by using all the equity they have built up in their home when refinancing.
2) Reducing the maximum amortization period for new government insured (default insured) mortgages
The maximum amortization for all new default insured mortgages will be reduced to 30 years from the current 35 years. This change will help reduce total borrowing costs for consumers, helping them to build up equity more quickly.
As an example, a $300,000 mortgage with a 4.5% interest rate and an amortization of 35 years has a monthly payment of $1412.05 and total interest cost of $293,059.17 over the life of the mortgage. The same mortgage with a 30 year amortization has a monthly payment of $1512.65 but total interest cost reduces to $244,551.49. The difference of roughly $100 a month in monthly payment reduces the interest cost by almost $50,000 over the life of the mortgage.
New Guideline - Effective April 18th 2011
Trever Florko, REALTOR
Century 21 Assurance Realty (Kelowna)
Cell: (250) 859-5990
Office: (250) 869-0101
Fax: (250) 869-0105
Visit my website: www.florko.caPS. Your referrals to friends and family are always greatly appreciated and rewarded.