Mortgage News - Dept of Finance May Mandate Higher Down Payments

[blubs]

Originally posted by 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 )

I agree with the 10% rule here.

Pretty similar to you, bought a house in Acadia right away. Lived like a peasant first year out of school, lived at home and put money away and just did it. Took a small loan from my parents so that I didn't have CMHC, and that got me going. Since then I put a basement suite in for rental income that I rent out to a close buddy which helped repay the loan and now knocks down the mortgage amount. Likely one of the best decisions i've ever made.

That being said, I've got friends who bought places in Airdrie with 5% down, and are really stretched thin, now have people renting rooms, and its just a mess. Now with loss of jobs it gets worrying. If we had a higher amount required, in my opinion it would help people not get in these situations.

[Feruk]

This changes nothing. If I was to buy a 550K place, I'd now need 5.45% as a down payment instead of 5%. Big whoop.

Speaking of crazy, I know a couple that bought a $750K house with 5% down. That's ~$4K/month! If/when she goes on mat leave, they're fucked!

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

I believe what you've quoted is a non-White tax.

[kenny]

If they really wanted to cool the Vancouver and Toronto market they should have just implemented a tax on non-resident / holding company purchases of homes.

[SkiBum5.0]

The guise of cooling those markets is utter bs. If anyone thought this government was going to be transparent, this should provide some clarity.

This will have more effect on Calgary, the city that carries the most high-leverage mortgages between $500K and $1M.

[tpurcell4]

^
Still, the majority of our clients buying over $500,000 are putting more than 5% down. There are a few that will be affected, however this rule change will just force saving a little bit longer (and not much longer at Feruk pointed out), or buyers will have to find a home under $500,000 (which is still not bad).

What is likely to happen based on this, is the sub-$500,000 purchase range may get slightly more competitive.

Edit/Add on:

As I mentioned to a realtor in conversation the other day, this seems to be more of a perception that they are making change, vs. actually making a change. And will not touch the over heated markets of Toronto or Vancouver, where most homes are over $1million, and already require 20% down or more. - end rant

[Xtrema]

Originally posted by Feruk
This changes nothing. If I was to buy a 550K place, I'd now need 5.45% as a down payment instead of 5%. Big whoop.

Speaking of crazy, I know a couple that bought a $750K house with 5% down. That's ~$4K/month! If/when she goes on mat leave, they're fucked!


I believe what you've quoted is a non-White tax.

5% down on $750K? Wow.

Well this change is not drastic enough to cool the market. I thought it'll be 10% for the full amount, not just the amount over $500k.

[cycosis]

Originally posted by tpurcell4
^What is likely to happen based on this, is the sub-$500,000 purchase range may get slightly more competitive.

Thats the last thing I want to hear.

[nickyh]

My builder required 20% down when we built in 2009, fortunately we had the equity in our first home to put towards that.

[mr2mike]

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

I feel ExtraSlow, if American, would vote for Trump.

[ExtraSlow]

Fuck that, I hate Americans even more than I hate folks from those other regions.

[Masked Bandit]

Originally posted by 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.

If you're buying a $750,000 house and don't have the means to pull together $50,000 plus associated costs, you shouldn't be buying that house.

[masoncgy]

Who would do that, anyways? Unless you're super wealthy I don't know why anybody would want to take on that kind of debt.

Oh right, they can afford the monthly payment, well right now anyway. haha.

[TimLacroix]

Reminder - New Down Payment Rules Effect Feb 15, 2016

Click to find out more about Will Higher Down Payments Affect Your Home Purchase?

[KPHMPH]

20% down is the only way in my books to do it. Why waste another _____$$ on CMHC fees.

[HiTempguy1]

Originally posted by KPHMPH
20% down is the only way in my books to do it. Why waste another _____$$ on CMHC fees.

I've never understood why people get so up in arms about CMHC fees. It might be a couple of extra grand on a $400k purchase. Sure, money is money, but considering the purchase, it's silly to hold off buying just so you can save up some arbitrary amount

[JustinL]

It really depends on the situation. The CMHC fee changes from $8000 to 0$ by upping the down payment from 109,999 to 110,000 on a $550,000 home. For some people, it's not even close... but if you are in range of the 20% I think it's worth stretching to try to make it.

[ianmcc]

Anyone remember the 80s and Jingle Mail?

http://www.cbc.ca/news/canada/calgar...sing-1.3430867

[Sugarphreak]

...

[Xtrema]

Originally posted by Sugarphreak


I agree 100%.... in fact, they should just roll out a far higher property tax for non-resident owners right now. It would be a huge cash cow and deal with the problem of investors from other countries making housing affordable for locals.

should have done it years ago. Now with the Chinese population so high, it will get voted down unless it's a provincial mandate.

Even then, Christy Clark love Chinese money.

[googe]

The other reason you want 20% down in Alberta, especially now: no recourse mortgages.

The bigger problem is amortization. Much of the "value" of a house is artificial in that it is due to the fact that most people will leverage themselves to the maximum payment allowed, driving up the prices for everyone else, forcing others to do the same. You hear sound advice about how you should do affordability based on 15 year amortization, but if everyone else in your price range is doing 30, you don't have much choice. And the banks win.