The government’s change in maximum amortizations probably won’t affect you as much as you might think. Similar to the past two amortization adjustments from 40 years to 35 and 35 to 30, the changes are nothing more than a return to the pre 2006 normals for mortgage qualification.
As far as the impact the changes will have on payments is concerned, based on today’s rates you can expect payments on a 25 year amortization to be about $52 higher per $100,000. However, keep in mind that the $52 in question goes directly to principal, not to the bank. In other words, it remains your money.
For qualifying purposes, if you have been pre-approved for a mortgage based on a 30 year amortization and you don’t firm up your deal by the July 9th deadline, you can expect your maximum pre-approval amount to drop to about 89% of its original value. So, if you were pre-approved for $300,000, you will likely only qualify for $267,000 under a 25 year amortization.
For further information on the changes, you can read the article from the Globe and Mail here.
