Here’s how the HELOC portion changes for Re-Advanceable Mortgagesas of Nov 1, 2023
- mbrowne
Big News: Have a Mortgage and HELOC on your property? Here's an upcoming change with Scotia Bank (And Likely other lenders too...)
This may be the biggest change in recent history affecting real estate investors in the mortgage industry since the stress test came out.
Last year OSFI (the big guys who regulate everything money in Canada) came out to say they want to reduce risk in the financial markets.
They wanted to reduce the total debt limits on what the call “Combined Loan Products” (CLP).
In normal terms, these are mortgage and HELOC products.
The long story short is that the maximum total loan to value (aka the “global limit”) of these products will be capped at 65%. Until recently the implementation was fuzzy at best.
So what happened?
On May 19th, Scotiabank (a lender who has been commonly used by mortgage brokers for their great re-advanceable mortgage/HELOC product) became one of the first to outline how this will be implemented.
Here’s how this will look for them (and likely others):
The rules start Nov 1, 2023
The Global Limit will gradually reduce until reaching 65% LTV based on the property value at the time the loan product started
The reduction will be monthly and spread evenly across a 25-year period
These rules will only impact mortgages opened after Sept 15, 2012
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