Between 2008 and 2012 the federal government have made several changes to the rules concerning government backed insured mortgages including reducing the amortization from 40 years to 25 years and increasing the minimum downpayment to 5%, to name a few. Today marks the implementation of another change which includes the increase in the downpayment on a home’s portion of $500,000 to a minimum of 10%. What does this mean for the Canadian consumer? For example, let’s say that you purchase a home for $825,000, with the old rules your minimum downpayment would be 5% or $41,250. With the new rules the downpayment would be split up as follows 5% on the first $500,000 = $25,000 and 10% of the difference between $825,000 and $500,000 = $32,500 for a total downpayment of $57,500. This is an increase of $16,250 for a downpayment on a home worth $825,000.
The finance minister expects that the impact of this rule change will be less than 1% of the housing market. I can’t see it affecting the average consumer purchasing a home worth over $500,000 as well as many have 10% or more to place as a downpayment on these priced homes.
To read the full press release from the Department of Finance please click here… and please reach out to our office should you have any questions or concerns. We are here to help!
Kim Gibbons, Mortgage Superhero ®
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Your Toronto Mortgage Broker