CMHC Changes Make Finding Mortgages Tougher For Most Canadians: Part 2

In Part 1 of this article, you read about changing mortgage policies—specifically, the shortened length of CMHC-backed mortgages—was making it harder for many Canadians to purchase homes. Simply put, by shortening the amount of time during which a mortgage could be repaid, the CMHC is requiring loans with larger monthly payments (paying back the loans faster means making larger payments).

The only way to reduce the amount of those monthly mortgage payments is to put up a larger down payment for a house, thus reducing the overall amount borrowed. That means delaying a home purchase until the down payment is saved, and that means a big slump for sellers and more years of renting for those hoping to purchase their first home.

If there’s a silver lining here, it’s that there are fewer home buyers paying the extra expense of mortgage insurance to the CMHC. For buyers who are able to come close to a 20% down payment, waiting a few extra months to save up and avoid paying the premium tends to be a wise decision anyway.

“For those who are in a good financial position, it comes down to what the CMHC premium will be if they make a down payment of less than 20 per cent, compared to what they would earn if they invested their money somewhere else,” explains Patricia Collins, a mortgage broker with Dominion Lending Centres in Vancouver.

For buyers in weaker financial positions, of course, the investment trade-off is hardly a concern. Instead, finding a mortgage lender who can help them get into the home they want—and a mortgage that will allow them to stay there as long as they want—is the trick. The CMHC hasn’t made things especially easy of late, but there don’t appear to be any other major mortgage-lending changes on the horizon.

Now might be the right time to find the right house and the right lender. To discuss your mortgage borrowing situation and learn about new opportunities, please contact us today.

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