The government of Canada is adjusting their policy on government backed mortgages based on what’s happened in the U.S. housing crisis. As of October 15, 2008 you won’t be able to get a 40 year, no money down mortgage, backed by the government anymore. Their new rules and requirements for the 35 year amortization mortgage with a minimum of 5% down will likely be so tight you won’t qualify for it either.
We have talked about the 40 year amortization mortgage in our monthly newsletters, and while I do know there are reasons some may pursue them, I just couldn’t imagine willingly paying THAT much more interest on a loan. If I was a first time home buyer, I would rather wait a few more years and built up my down payment then extend myself so much that I need a 40 year amortization to make the house affordable. Personally, I don’t think we need 40 year amortizations to make housing affordable. We need ways to help the first time home buyer get into the market. First step, I think, is to raise the first time home buyers exemption above $425,000 (especially for those of us in Vancouver or Victoria).
From the Vancouver Sun, July 9th, 2008
VANCOUVER – The federal government will no longer guarantee 40-year or zero-down mortgages in an effort to avoid a housing crisis like the sub-prime mortgage meltdown experienced in the United States.
In an announcement released today, the government said government-backed mortgages would require a minimum down payment of five per cent and a maximum amortization period of 35 years. The borrower would have to have a consistent minimum credit score and there would be new loan documentation standards.