BUYING A VACATION HOME IN CANMORE - HOW THE CANADIAN MORTGAGE RULE CHANGES WILL AFFECT YOU
As of April 19, 2010, there will be some important changes to Canadian mortgage rules that may affect people looking to buy a vacation home in Canmore. In picturesque, small mountain towns like Canmore, vacation homeowners make up approximately 30% of our population and account for approximately 15% of our population growth.
The Canadian government Minister of Finance, Jim Flaherty, who announced the changes said "Canada's housing market is healthy, stable and supported by our country's solid economic fundamentals, however, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing." Further explanation on the government's decision to institute these changes can be found on the Government of Canada Website.
- All borrowers will need to qualify for a five-year fixed rate mortgage. This is required even if the borrower chooses a lower interest rate and shorter term.
- For government-backed mortgage insurance on non-owner-occupied speculative investments such as rental properties, the down payment required will increase from 5 percent to 20 percent.
- For Canadian homeowners looking to refinance their mortgage, the maximum amount that can be withdrawn changes to 90 percent from 95 percent of the value of the property.
Many of the Canadian Mortgage Rules haven't changed - the maximum 35-year amortization period remains the same, as does the 5 percent minimum down payment for regular homebuyers who plan to reside in the home. So for many, buying a vacation home in Canmore is still as simple as finding the right place to hang your hat (and/or skis, golf clubs, climbing gear, fishing pole,...)
In October 2008 CMHC (The Canada Mortgage and Housing Corporation) also made mortgage rule changes. The government would only insure mortgages with a maximum of 35 year amortization, where previously they had been insuring to a maximum of 40 year amortization. Government insured mortgages after this time also required a minimum 5 percent down payment.
For those of you ready to buy a vacation home in Canmore there are some excellent mortgage rates available right now. The Spring mortgage market has been very competitive in terms of the attractive rates that lenders are offering, especially on quick closings.
Chezlene Kocian, MaxWell Mountain Realty
Canmore, Alberta, Canada