27 Jun 2012

What the new mortgage rules may mean for homebuyers

Canadian Finance Minister Jim Flaherty recently announced new rules for the housing market designed to cool off the red-hot cities like Toronto and Vancouver. Prices in these places are skyrocketing and some economists are worried homebuyers are biting off more than they can chew. So how do the new rules work?

The big change has to do with amortization, or the length of time for a mortgage. Those who put down less than 20 percent for their down payment are now limited to 25-year mortgages. Larger down payments can still have standard 30-year mortgages.

According to Moneyville, this affects the homes a family might be able to afford. For example, the ceiling on a 30-year mortgage for a house with annual income of $75,000 is likely about $414,000, according to the news source. But that same house borrowing for 25 years will likely only be approved for mortgages up to $375,000.

With some consumers forced into more modest homes, new homeowners may need to think of some creative solutions. For example, buying a smaller home and then supplementing the space by renting a storage unit is a good way to get around the rules, and can allow owners more space in their house.

Self storage can be a smart way to hang on to valuable items without taking up room in a house or apartment. For Toronto storage solutions, there's no better than Jiffy Self Storage. Those interested in self storage should check out the affordable rates on Jiffy's website, where they can also enter to win a free iPad 3.

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