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Reduction in mortgage ammortization periods

DrewBetts

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Take a peek at the following article: http://www.reportonbusiness.com/servlet/st...y/Business/home It looks like the end of 40 year ammortization period mortgages. We`ve been using them heavily to increase cash-flow on our properties. I`m curious if all the lenders will change their terms and if there are any other surprises in store on the financing front. Any thoughts or info?
 

MonteDobson

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Not sure if I`m reading into this right or not, but according to this excerpt the new rules apply only to insured mortgages and no mention of conventional (ie. <80% LTV) mortgages.
"The government said the measures will apply to new, government-backed, insured mortgages
. "Canadians who already hold mortgages will not be affected," it said." - cbc.ca
 

GarthChapman

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QUOTE (C2Ventures @ Jul 10 2008, 08:15 PM) Not sure if I`m reading into this right or not, but according to this excerpt the new rules apply only to insured mortgages and no mention of conventional (ie. <80% LTV) mortgages.
"The government said the measures will apply to new, government-backed, insured mortgages
. "Canadians who already hold mortgages will not be affected," it said." - cbc.ca


It relates to insured mortgages only.

These sorts of changes have been anticipated for a while now - Don and Peter Kinch have both talked about this at REIN meetings.

I think this will be but one of many changes by the Federal Government and by Lenders to ensure Canada continues to remain free of the lending conditions that led to the US Sub-Prime crisis and resulting real estate market melt-down.

There will surely be more to come, including changes to the due diligence and approval processes used by lenders and mortgage insurers designed to uncover fraudulent applications for mortgages.
 
L

lanedry77

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so 40 year amortizations will still be available on conventional purchases or refinances where the equity is above 20%?



David.
 
R

RussellWestcott

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Hello everyone, we have Peter Kinch on the hunt to dig up all the information, as he is very well connected in the industry, and he will be presenting all the findings next week at the BC REIN™ meeting.

After the meeting we will then post for everyone all the details of the proposed changes, or perhaps I`ll get Peter on a webcast for all REIN™ members to hear the details.

Stay tuned, take a deep breath... during times of change in policy, there are opportunities if you are informed educated and take advantage of your education. That`s why everyone should attend the monthly REIN™ meetings, listen to your CDs, keep active on the discussion forums, that way you will stay ahead of the curve and be able to take advantage of the changes.

Interestingly enough a year ago there was only 25 year amortizations, now after the changes we still will potentially get 35 year amortizations...

Couple quick numbers:
$100,000 mortgage
5.5% interest
Payment based upon 40 year amortization = $511.56
Payment based upon 35 year amortization = $532.96

looks like a $21.40/ month difference in monthly payment for $100,000 mortgage.... hmmm, I know who I will be sending the bill for the increase in monthly payments to... my customers (non rent controlled markets), plus these changes can potentially help create more customers for our rental properties. Supply of potential tenants goes up
style_emoticons
.

As mentioned we will get all REIN™ members further information as it becomes available.

Cheers
 

PhilipMcKernan

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Hi All,

Just to give another perspective which I believe its always important.

IRELAND MORTGAGE/MARKET CHANGES

Count yourself lucky to be in Canada right now as Ireland is going through a reversal of the boom which I predicted would happen almost two years ago. It did not take a genius to predict it but the enormity of the reversal is serious and compounded by the credit shift.

  • Investors are now being asked to put down 30% cash
  • some of the largest lenders are saying NO to investors totally
  • Affordability is off the scalesConsumer confidence is on the floorReal Estate is dropping in value fast
So maybe things here are not so bad?
 

HeatherVickar

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Hi Russell,
Shouldn`t the payment for the 40 year amortization period be less??

Thanks,
Heather



QUOTE (RussellWestcott @ Jul 11 2008, 11:18 AM) Hello everyone, we have Peter Kinch on the hunt to dig up all the information, as he is very well connected in the industry, and he will be presenting all the findings next week at the BC REIN™ meeting.

After the meeting we will then post for everyone all the details of the proposed changes, or perhaps I`ll get Peter on a webcast for all REIN™ members to hear the details.

Stay tuned, take a deep breath... during times of change in policy, there are opportunities if you are informed educated and take advantage of your education. That`s why everyone should attend the monthly REIN™ meetings, listen to your CDs, keep active on the discussion forums, that way you will stay ahead of the curve and be able to take advantage of the changes.

Interestingly enough a year ago there was only 25 year amortizations, now after the changes we still will potentially get 35 year amortizations...

Couple quick numbers:
$100,000 mortgage
5.5% interest
Payment based upon 40 year amortization = $532.96
Payment based upon 35 year amortization = $511.56

looks like a $21.40/ month difference in monthly payment for $100,000 mortgage.... hmmm, I know who I will be sending the bill for the increase in monthly payments to... my customers (non rent controlled markets), plus these changes can potentially help create more customers for our rental properties. Supply of potential tenants goes up
style_emoticons
.

As mentioned we will get all REIN™ members further information as it becomes available.

Cheers
 
R

RussellWestcott

Guest
Guest
ooops,
style_emoticons
numbers are correct but put them on the wrong line.

I guess it proves you dont have to be a rocket surgeon to invest in Real Estate
style_emoticons
. That is the `new math` we were taught going up in Saskatchewan

Now corrected, for those who do not know the `new math` formula`s
 

donksky

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Go look for recent heading: "Ottawa tightens mortgage..." subject-it`s got articles/links on insured mortgages there as well.
 

mortgageman

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Several lenders (ING and Firstline) have immediately moved to maximum amortizations of 35 years. They will honour 40 year amortizations on deals that are already in their pipelines. So I`d suggest that you start analyzing properties based on 35 year amortizations and if you can snag the extra five years when the rubber hits the road - BONUS!
I agree with Russell that the dollar figure for the payment shouldn`t make or break the bank except on tight deals. I think the bigger impact on the average joe will be the required five percent down payment. You`d be amazed at how often I get contacted by people who are looking to buy a principal residence with no money down.
 
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