NEW DOWN PAYMENT RULES
New down payment rules come into effect as of February 15, 2016.
The minimum down payment for new insured mortgages will increase from 5% to 10% for the portion of the house price above $500,000. For example: A $750,000 home will now require $50,000 down -- 5% for the first $500,000 and 10% down for the remaining $250,000.
Properties up to $500,000 will continue to require a minimum of 5% down. Properties in excess of $1 million will still require 20% down. According to the Ministry, these changes are meant to reduce taxpayer exposure while supporting long-term stability of the housing market
EXAMPLE OF A $700,000.00 PURCHASE
BEFORE FEBRUARY 15TH, 2016
5% MINIMUM DOWN PAYMENT
5% X $700,000.00 = $35,000.00
AFTER FEBRUARY 15TH, 2016
$500,000.00 @ 5% = $25,000.00
$200,000.00 @ 10% = $20,000.00
DOWN PAYMENT REQUIRED $45,000.00 AN INCREASE OF $10,000.00 FROM THE MINIMUM 5%
DOWNPAYMENT ACTUALLY 6.4%
If you would like to take advantage of the ‘old’ rules, you need to have a Purchase and Sale Agreement in place, including a mortgage application, by February 15, and the closing date must be no later than June 30.
The ministry is saying that this will only impact 1% of home purchasers. They figure that it will not affect the BC or Toronto Market, other cities in Canada we feel will be highly affected, definitely slowing down the market.
For more information visit www.vdass.ca