We have had a week now to reflect on the recent government changes to mortgage policies. While it may not effect a lot of you, there are probably some of you, or you know someone who this may effect. The policies do not come into force until March 18th, (however, last time this happened, several lenders put it in place before the cut off date) so there is adequate time to research out all your options and make sure you do not miss this window of opportunity.
The biggest change is the scaling back in the loan to value from 90% to 85% on refinances. On a $300,000 property, this means a loss of potential refinance dollars in the amount of $15,000. In addition, when analyzing the insurance costs, if you are going from a conventional position (80% and no insurance fees) it will make it very expensive to even consider extra insurance fees (2%$…5000- on a 30 year amortization-on a $250,000 mortgage) bottom line it means extra costs of $5000 to borrow $15000!!
The second part of the change has to do with the decrease in the amortization period from 35 to 30 years. While not as major as the decrease in the loan amount, it will result in higher payments and resulting in a more challenging qualification for some applicants (only if ratios-GDS/TDS are tight).
So the main purpose of this communication is as follows: If you or anyone you know is thinking at all about consolidating any loans, borrowing additional funds for any purpose, you owe it to yourself to at least look into it right now to see if it is a benefit for you. Our advice and guidance is always free to assist you in making the best decision for you or your family.