For those borrowers with less than 20% down payment (otherwise referred to as high ratio mortgages), mortgage default insurance in required. Government backed mortgage insurance has been around for a long time, and the idea behind it is to make it easier for Canadians to buy or refinance their properties even with low down payment. In case of a loan default, the insurer (CMHC or Genworth) would compensate the lender. And to qualify for the insurance there are a set of guidelines the borrower has to meet. Now in response to concerns about increasing personal debt levels of Canadians, the federal government has decided to tighten some of the insurance rules. They are as follows:

1. The maximum amortization will decrease from 35 years to 30 years (effective March 18, 2011).

2. The maximum loan-to-value ratio (LTV) for refinancing will decrease from 90% to 85% (effective April 18, 2011).

3. Home equity line of credit (ie credit line secured by a home) will no longer be insured (effective April 18, 2011).

Remember, these changes are for INSURED mortgages only. Also, if a mortgage application is approved before the effective DATES indicated above, the borrrower can still take advantage of the rules before the new rule changes.