If your buying your first home or this is your third home purchase having the best understanding and knowledge of the new Mortgage rules is crucial! so that you are not left feeling out of the loop, shocked or even defeated before shopping the Markets.
Canada Mortgage and Housing Corporation (CMHC) have changed the rules on how much down payment is needed for homes with a purchase price of $500K or higher, making it a blessing in disguise for some but not for all! Generally, this will not be a concern for first time home-buyers as we find the purchase price is never greater than the $500K range, unless they are a move up buyer, (someone who buys a house that is larger and more expensive than the house they already own.)
What does the new down payment look like?
CMHC is now asking to see 5% down on the first $500K and 10% down on the remaining amount that does not exceed $999,999, any amount that is greater than this becomes 20% down, which is a large amount of money to be putting down especially in the Vancouver and Toronto Markets, as these homes have increased significantly in price. Just to give you a visual of what the break down would be, see our example below;
5% down on the first $500K $25,000
10% down on remaining $200K $20,000
For a total Down payment of $45,000
That’s an increase of $10K
When looking at these new rules it isn’t always a negative affect as much as it might feel, Rob Carrick author for The Globe and Mail explains, ” If we cool the Market a little bit, as the new down payment rule is designed to do, the risk of a pullback is at least somewhat reduced. It’s hugely important for the government to get this right because so much of the nation’s wealth is tied up in home equity. Boomers in particular are living in homes that have increased many times in value. A big decline in house prices would be a shocking setback to these people and could negatively affect their financial health in retirement.”
Keep checking back to our blog for more Mortgage updates.
Thank you, Mortgage Man – Dominion Lending Centres – Top Mortgage Broker in Orillia.
Mark Goode AMP / MarkGoode.ca / 705-326-8523 / 1-866-326-8523 / 180 Memorial Avenue Orillia, ON
All credits and copyrights to their respectful owners – Brittny S – MMDLC