SmartHomeOwners

Financial Post reported that the Canadian government may look at tightening rules in the mortgage market.

These new considerations may be in the areas of higher downpayment requirement, firming up on mortgage qualifying rate and reducing amortizations.

If any of these is implemented, Canadians will borrow less to purchase their homes and the result will be negative on the real estate market and overall Canadian economy.

Existing mortgage rules:

1. You need only 5% of purchase price as down payment to purchase your home. 20% of purchase price is required for investment properties.
2. Bank of Canada's higher mortgage qualifying rate only applies to shorter terms than five or variable rate mortgages. If you apply for a five year fixed rate mortgage, you can still use the discount rate to qualify (for a higher mortgage amount).
3. Current maximum amortization is 35 years (it was reduced from 40 years in April 2010).

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