Come Monday, insured 30-year amortizations will be a thing of the past, and the shift means many buyers are scrambling to find a home and seal a deal this weekend, before time runs out.
As part of an attempt to cool the housing market and reduce household debt, the maximum amortization on government-backed mortgages will be 25 years.
“It will mean some people will not be able to buy into the market, some people will buy less into the market,” Finance Minister Jim Flaherty said in announcing the new rules last month.
Bruce and Denise Perrett, of Port Coquitlam, B.C., got married last year and wanted to buy a house, but they weren’t in a rush.
That all changed when the couple heard Ottawa was tightening mortgage rules.
For the Perretts, locking into a 30-year term as opposed to 25 years meant an extra $300 a month that could go to strata fees or property taxes.
They sprang into action and called their mortgage broker.
“She was right on it, she got us the approval and the next day we were rolling,” said Denise Perrett. “Then we found out we had to have an accepted offer by [July 9] and then we panicked and called our realtor.”
The new rules limit buyers’ purchasing power, said mortgage advisor Milka Lukacevic.
For every $100,000 it's about a $60 difference, and in an expensive market like the Lower Mainland, every penny counts.
But Lukacevic says the rush to take advantage before the rules change can carry a lot of stress.
“You can't necessarily — because the rules changed in a matter of weeks — go out and find something just to try and get it on a 30- year.”
The Perretts spent 48 hours looking at homes and put an offer that was accepted last week on a property in Maple Ridge that has everything they want.
The best part is that they qualify for a 30-year mortgage.
“We probably wouldn't have been able to afford to mortgage a house, or at least not the house we wanted, if we hadn't jumped on it,” Bruce Perrett said.
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