Wednesday, July 16, 2008

TD Bank changes mortgage maximum amortization

TD Canada Trust (TSX:TD) changed its mortgage offerings Wednesday to bring its lending rules in line with regulatory changes set to take affect in October.

The bank said effectively immediately the maximum amortization period for new mortgages will be 35 years and will require a five per cent down payment.

TD said it will continue to process those mortgages with a longer amortization period or a lower down payment that have already been approved.

TD joins Bank of Montreal in changing its lending rules ahead of the Oct. 15 change in regulations

Ottawa moved to tighten the rules for government-guaranteed mortgages this week in a bid to prevent a meltdown like the one in the U.S. subprime mortgage market.

Starting Oct. 15, the Finance Department said it will no longer guarantee 40-year mortgages and will require a minimum down payment of five per cent of the value of a home.

Government-backed insurance is currently available on mortgages where the loan-to-value ratio is up to 100 per cent - in other words the buyer has borrowed all the money to buy a home and then gets insurance coverage on the whole amount.

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