Mortgage News - Dept of Finance May Mandate Higher Down Payments

[TimLacroix]

Department of Finance May Mandate Higher Down Payments

According to an unidentified but high level lender source connected to the Department of Finance recently stated that the department may recommend that the minimum down payment be increased to 10%. Policy makers are reportedly considering implementing a graduated scale based on either home value or mortgage amount that would look something like this:

$0 to $500,000 requires at least 5% down
$501,000 to $700,000 requires at least 7% down
Over $700,000 requires 10% down

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[gwill]

A sliding scale would make a lot of sense.

[roopi]

I see nothing wrong with this. Think the numbers could be higher.

> $500,000 - 10%
> $700,000 - 15-20%

[TimLacroix]

The current guideline is purchases over $1M require 20% down payment (minimum) and scales at higher purchase prices.

Purchases of $999,999 require a minimum of 5% however, each file is different based on overall risk, location etc.

We will keep this thread updated as more information is available.

[sputnik]

5% down is still too low.

It should be

- 10% for under $500k
- 20% for over $500k

[max_boost]

That's it? lol

[nzwasp]

They should adopt New Zealand's approach - minimum 20% down regardless of the cost of the property, with a maximum amortization of 25 years. However this has pretty much shut out everyone under 30 from the real estate market and still not made it harder for foreign owners to buy up half the country.

[Feruk]

Originally posted by sputnik
5% down is still too low.

It should be

- 10% for under $500k
- 20% for over $500k

Beat me to it. If you can't find 10%, you have no business buying a house.

[TimLacroix]

Breaking News - Finance Minister Bill Morneau announced the plans to increase down payment effective Feb 2016.

http://bit.ly/1OW633a

[sputnik]

Originally posted by TimLacroix
Breaking News - Finance Minister Bill Morneau announced the plans to increase down payment on Friday morning, Dec 11, 2016.

http://business.financialpost.com/pe...ousing-markets

That is still too low.

There should be a 10% minimum right across the board.

[Cos]

.

[nzwasp]

We put just over 5% down on our current house which is how we ended up with a 2600$ mortgage on a house worth 620k. I think we have about 540k left on the mortgage after 3 years of paying it. Our plan was to use bonuses to lessen the amount of principle on it, although that strategy is starting to look a bit ineffective in the short term.

[G-ZUS]

Originally posted by sputnik
5% down is still too low.

It should be

- 10% for under $500k
- 20% for over $500k

Took the words right out of my mouth, have an acquaintance that bought a house for ~350 k with 5% down. He can barely afford to live.

Originally posted by Cos
I am not sure how you would even WANT to buy for over $500,000 with only 5% down.

because budget baller

[loweg]

We did this. Skipped the condos , skipped the starter home. Bought a bungalow in braeside around the 500k as our 10-15 year home. Put more than 5 down , but bought young so less than what i would have wanted (think that's like everyone )

Originally posted by Cos
I am not sure how you would even WANT to buy for over $500,000 with only 5% down. I didn't have nearly as much as I wanted (never do) when I got my place but I was definitely over the 5% down. I don't know anyone who is going right into a $500k+ house from nothing either, you are usually taking some money from your existing place into it and hopefully have $25k equity at least to roll in.

[Cos]

.

[TimLacroix]

Just a little clarity on the change. The down payment change is:

5% up to $500,000 purchase
10% of the amount over $500,000 up to $1M

Example: $750,000 purchase will require a down payment of $25,000 on the $500k and $25,000 on the balance of $250k.

[nzwasp]

Originally posted by Cos


Fair enough guess it is a lot more common than I thought. I moved out of my parents at 18 though so I couldn't have rented with shitty landlords long enough to save that much. Haha

Once you have a couple of kids saving for big down payments becomes a lot harder. Until they are out of daycare and you don't have to spend 25k per year on caregivers.

[Cos]

.

[jacky4566]

Originally posted by nzwasp
They should adopt New Zealand's approach - minimum 20% down regardless of the cost of the property, with a maximum amortization of 25 years. However this has pretty much shut out everyone under 30 from the real estate market and still not made it harder for foreign owners to buy up half the country.

Well I certainly hope nobody expects to discourage foreign investment with higher minimums. The two arent really related. The Chinese millionaire isn't hiding money minimums at a time.

If that's your goal then there needs to be higher taxes for non-Canadian land owners.

[ExtraSlow]

Originally posted by jacky4566
Well I certainly hope nobody expects to discourage foreign investment with higher minimums. The two arent really related. The Chinese millionaire isn't hiding money minimums at a time.

If that's your goal then there needs to be higher taxes for non-Canadian land owners.

But only if the come from certain countries. You know, Asia, the Middle east, Africa, and the shitty parts of south-east Europe.