Recent federal legislation has increased the maximum loan to value ratio under which conventional lending can be done in Canada without a requirement for mortgage insurance.
An amendment to the Canadian Bank Act came into effect on April 20, 2007, which increases the threshold for mandatory mortgage default insurance on residential real estate secured loans to 80% loan-to-value ratio (LTV) from 75% LTV. Mortgage default insurance in the 75.1% to 80% range is no longer required by Law.
Why is this great news? It makes home ownership more accessible as the purchaser will no longer have to work to build up a 25% down payment in order to save the cost of mortgage insurance premiums. The reduced requirement of 20% will put home ownership within reach for more clients and sooner than before this change.
On a Purchase Price of $250,000 the savings on insurance premium is approx $2,500. a fee that will no longer be added to the mortgage also reducing the interest charges on that same amount over the amortization of the mortgage.
For details on this and other innovative borrowing strategies contact:
Ontario Mortgage Team
Mortgage Intelligence Inc.
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www.OntarioMortgageTeam.com/applynow.aspx
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