Well, the end of 2023 sounds like a long way away, but it is only 16 months and time flies!  Rules are changing for two types of home equity mortgages:

HELOC

A Home Equity Line of Credit, or HELOC, is a mortgage product that contains a conventional fixed amount mortgage, and a rotating Line of Credit portion.  The Line of Credit portion is available to the lender at any time with flexible payment options, including interest only payments.  Right now, the limit of a HELOC is 80% Loan to Value (LTV).  So, for example, if you have a $100,000 home, you can have a HELOC up to $80,000.  Starting at the end of 2023, the maximum LTV for this type of product will be reduced to 65%.

REVERSE MORTGAGES

Reverse mortgages are financial products offered to people over the age of 55. There are no income requirements to qualify.  The home owner can draw funds at any time, or sometimes it is set up to have an amount added to the mortgage each month with a payment of that amount to the home owner.  No payments are required, and any interest accumulated is simply added to the principal of the mortgage.  So with time, the principal increases.  These are relatively new products in Canada, and traditional LTV maximums have been creeping up over the past few years.  They currently sit around 60%.  Government regulations will cap these types of products at 65% LTV as well to keep it in line with HELOCs.

It seems in the mortgage world, the rules are constantly changing, and knowing what’s coming down the pipe is helpful when making decisions about buying or refinancing. Reach out anytime for a no-obligation review of your situation, and some thoughts on the best approach for you.