Posted on: 21-06-12 11:18:11
Quote:
Originally posted by JRF
This should've been done long time back.
fully agree !
Quote:
Originally posted by ashedfc
Another caveat is "One cannot Refinance", which means you are at the mercy of the existing Bank's renewal terms (good or bad you are forced to accept).
I am not so sure...
If one bought a 300K house with a 5% down payment at 30 yr amortization on a 5 yr term acc. biweekly payment; at the end of 5 yrs, with no pre-payments, the balance remaining is 236K, which is less than the 80% cut off of 240K. So, no problem with re-financing.
If the same is done with a 40 yr amortization, loan balance will be 260K. If the house price has appreciated to at least 325K, again you are covered.
I think the new rules will affect only those who keep tapping into the house equity.
Worst case: One can sell the place and buy a new one and is back to 95% financing.....
if the new rules keep the market stable. I am fine with it. No more increase in value of houses is required. They are already just too high. I read a news yesterday that rate will remain low till 2014. SO it make sence for Govt to tight the qualifying marks. less people to qualify to get those low rates
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infocan
Quote:
Originally posted by aqua
Quote:
Originally posted by ashedfc
Another caveat is "One cannot Refinance", which means you are at the mercy of the existing Bank's renewal terms (good or bad you are forced to accept).
I am not so sure...
If one bought a 300K house with a 5% down payment at 30 yr amortization on a 5 yr term acc. biweekly payment; at the end of 5 yrs, with no pre-payments, the balance remaining is 236K, which is less than the 80% cut off of 240K. So, no problem with re-financing.
If the same is done with a 40 yr amortization, loan balance will be 260K. If the house price has appreciated to at least 325K, again you are covered.
I think the new rules will affect only those who keep tapping into the house equity.
Worst case: One can sell the place and buy a new one and is back to 95% financing.....
Iwould request you to please recheck your calculations.
If some one buys a $300,000 house with 5% down payment then he/she has to pay $8407.50 in CMHC premium which is added to the mortgage making a starting mortgage balance of $293,407.50. Now even if we take a mortgage rate of 3% for the 5 year term with 30 year amortization, the bi-weekly accelerated payments would be $617.04 and the balance remaining after 5 years would be over $254,000.
So, if in 5 years the value of house goes up to $325,000 then the client can only refinanced up to $260,000 which means he would be able to refinance only $6000 and for this exercise he/she may have to shell out over $800 in legal costs. Of course, if the value goes up over $350,000 then he/she would be able to refinance a good amount.
I did not do calculations with 40 year am as it is no longer available on CMHC insured mortgages.
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Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
Quote:
Originally posted by Pramod Chopra
Iwould request you to please recheck your calculations.
I am sure your numbers are more accurate. I just used http://www.canadamortgage.com/calculators/amortization.cgi
with loan amt 285K; Mtg. Rate 3; Acc bi weekly; 5 yr term, 30 yr amort; It threw me 236K as the end of term balance.
Quote:
Originally posted by san-hugo
Quote:
Originally posted by JRF
This should've been done long time back.
fully agree !
+1.
This is a prudent move and if it cools the market, I will be happy, even though the paper value of my home drops a bit.
The market is definitely inflated and needs to cool down a bit. Not CRASH, but cool down (huge difference between the two). Hopefully this move results in the latter.
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