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Old 02-16-2010, 07:28 PM   #1
IChopCars
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New Mortgage regulations! BS



I agree that they need to tighten up on the lending criteria for loans...However, some of these new regulations are crazy. Now, certain (first time I believe) buyers need to lock into a 5 year fixed term. Sooo, if you decide to sell your home before the 5 years is up, youll pay a hugggge penalty! And that penalty is payable to the BANK. Basically the gov and bank, together, are taking almost complete control over your first real estate investment...I dont know about you guys but this really bothers me...

discuss
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Old 02-16-2010, 07:42 PM   #2
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Originally Posted by IChopCars View Post
Now, certain (first time I believe) buyers need to lock into a 5 year fixed term. Sooo, if you decide to sell your home before the 5 years is up, youll pay a hugggge penalty! And that penalty is payable to the BANK.
I haven't been following anything related to the mortgage market and regulations but I think that 5 year thing has been around for a while. One of my close friends, his parents sold their house last year (which they had been living in for 3 years I think) and got hit with that penalty. They had to file for bankruptcy because they couldn't afford the penalty (which is essentially the interest that the bank will be loosing)
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Old 02-16-2010, 08:01 PM   #3
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Originally Posted by IChopCars View Post
I agree that they need to tighten up on the lending criteria for loans...However, some of these new regulations are crazy. Now, certain (first time I believe) buyers need to lock into a 5 year fixed term. Sooo, if you decide to sell your home before the 5 years is up, youll pay a hugggge penalty! And that penalty is payable to the BANK. Basically the gov and bank, together, are taking almost complete control over your first real estate investment...I dont know about you guys but this really bothers me...

discuss
You obviously have no clue what you're talking about.

No one needs to be locked into any fixed term for 5 years, CMHC will just verify your income against the 5 year rate, previously, it was verified against the 3 year rate. This is so that morons that try to buy out of their means are still able to make their payments once their interest goes up.

If you have enough of a down payment to avoid CMHC, this won't even affect you.
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Old 02-16-2010, 08:04 PM   #4
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I haven't been following anything related to the mortgage market and regulations but I think that 5 year thing has been around for a while. One of my close friends, his parents sold their house last year (which they had been living in for 3 years I think) and got hit with that penalty. They had to file for bankruptcy because they couldn't afford the penalty (which is essentially the interest that the bank will be loosing)
That penalty is for breaking your mortgage, this is nothing new. You can avoid the penalty by transferring the mortgage to a new home. It's like signing a lease, you have to pay to get out of it. If you know you're going to be selling, get an open mortgage, without a penalty, but with higher rates.
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Old 02-16-2010, 08:23 PM   #5
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That penalty is for breaking your mortgage, this is nothing new. You can avoid the penalty by transferring the mortgage to a new home. It's like signing a lease, you have to pay to get out of it. If you know you're going to be selling, get an open mortgage, without a penalty, but with higher rates.
I just remember my friend telling me they got hit with the penalty because they sold before 5 years. I don't know the intricate details of the situation.
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Old 02-16-2010, 09:37 PM   #6
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I heard some crap about you might need 20% down! instead of the current 5!?

anybody got any actual info? - havn't googled the shit out of this one yet.
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Old 02-16-2010, 09:43 PM   #7
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You obviously have no clue what you're talking about.

No one needs to be locked into any fixed term for 5 years, CMHC will just verify your income against the 5 year rate, previously, it was verified against the 3 year rate. This is so that morons that try to buy out of their means are still able to make their payments once their interest goes up.

If you have enough of a down payment to avoid CMHC, this won't even affect you.
Im just going by what I heard on the news and havent looked into the details yet...but thx for the correction if it is one
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Old 02-16-2010, 09:44 PM   #8
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Originally Posted by IChopCars View Post
I agree that they need to tighten up on the lending criteria for loans...However, some of these new regulations are crazy. Now, certain (first time I believe) buyers need to lock into a 5 year fixed term. Sooo, if you decide to sell your home before the 5 years is up, youll pay a hugggge penalty! And that penalty is payable to the BANK. Basically the gov and bank, together, are taking almost complete control over your first real estate investment...I dont know about you guys but this really bothers me...

discuss
When is that going to happen?
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Old 02-16-2010, 09:58 PM   #9
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I heard some crap about you might need 20% down! instead of the current 5!?

anybody got any actual info? - havn't googled the shit out of this one yet.
only need 20% if it is not your principal residence.
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Old 02-16-2010, 10:09 PM   #10
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It's more meant to stop speculators from buying and flipping homes...
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Old 02-16-2010, 10:41 PM   #11
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It's more meant to stop speculators from buying and flipping homes...
but not the ones that have 20% down
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Old 02-16-2010, 11:14 PM   #12
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Those trying to break into this business don't. You can't stop speculators, it's illegal. You can make it harder to break in.
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Old 02-16-2010, 11:21 PM   #13
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These are good measures. Yes, it will make buying a home a little tougher, especially first time buyer but this will be good for everyone in the long run = no housing bubble. A lot people are buying properties now because of the low interest rates but you have to make sure you can still make payments if the rates go up. Unfortunately, to some people, they think low interest rates will stays forever and that equals to free money.
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Old 02-17-2010, 12:00 AM   #14
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I heard some crap about you might need 20% down! instead of the current 5!?

anybody got any actual info? - havn't googled the shit out of this one yet.
I think you might be confusing two different things - you need 5% to even get a mortgage now (no more 0-down in Canada).

You need 20% to avoid paying the CMHC premium, which is another couple grand (was in my case, at least). It's mandatory insurance because banks aren't allowed to finance more than 80% of the purchase price without insurance unless there is a 20% downstroke. In this case you are paying CMHC to insure the bank against the risk taken on you.

I can't see them changing the minimum requirement to 20% because
a) most people aren't able to save that much
b) it would put CMHC out of business
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Old 02-17-2010, 01:12 AM   #15
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20% is for second properties in your name, not first.

and I believe it's 25% to avoid CMHC fee's - and even at that - it's up to the banks to say 25% is enough, we don't need the insurance for you mr. customer. It's not law that you have to have it, it's the banks that mandate it for less than 25% down.

And no it wouldn't put CMHC out of business - There are other solutions other than CMHC - Genworth offers mortgage insurance as well to banks.
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