REAL ESTATE MORTGAGE UPDATE ~ TORONTO / GTA
Effective February, 2016 our new Liberal government will be applying the new rule and tightening lending ability for residential mortgages, setting a minimum down payment of 10% on the portion of home prices over $500,000.
Homebuyers are currently required to put down a minimum of 5% to qualify for Canada Mortgage and Housing Corporation insurance – a protection that lenders insist on when providing you with a mortgage worth more than 80% of the home’s value.
Back in December 2015, Finance Minister Bill Morneau said homes purchased below the new price ceiling will remain at five per cent.
The policy shift has been decided on, in an effort to limit Canadians’ exposure to financial risks should the housing market experience a correction.
Finance Minister Bill Morneau said, “We believe that by increasing the down payment . . . we will create a better buffer for people and make people more secure, and have the entire market be more stable”.
What does this mean exactly and how does it translate ?
Take a $750,000 home, for example, would now require a $50,000 down payment.
5% x $500,000 = $25,000
10% x $250,000 = $25,000
Your down payment required is $50,000
The government has adjusted the mortgage rules four times since 2008 and these adjustments did show a temporary cooling effect, in Toronto, and especially in the last set of tighter rules placed in 2012.
Look at this new rule as a means of protection for YOU, the homebuyer and the housing market in general which has been the leader of our economic stability.
As always, please do not hesitate to call if you or a friend have some Real Estate needs, I am here to help!
Your friend in Real Estate.
Suzana ( Sue ) Davies , Sales Representative Remax Realtron
firstname.lastname@example.org 416-843-7017 www.suzanadavieshomeseek.com