Despite the fact that I am a little late to the party with this post, I would like to take the time and explain to my clients and readers what the new mortgage rules entail and how they will affect YOU.

On Friday December 11^th our Finance Minister Bill Morneau announced that commencing February 2016 your minimum down payment on a home over $500,000 up to $1,000,000 will be increasing. To put this into perspective, if you are buying a residential property today, CMHC will insure a residential mortgage with a down payment as little as 5%. As of February, purchasers will be require to put down a further 10% down payment on the portion of the home price over $500,000. The minimum of 5% will still apply to the portion below $500,000.

Lets take a look at an example for more clarity. Lets assume you are shopping for a Toronto home priced at $800,000 (townhouse most likely, given the current market trends).

Down payment required today:

5% of $800,000 =     $40,000

Down payment required as of February 2016:

5% of $500,000 = $25,000
+
10% of $300,000 = $30,000
=
$55,000

As you can observe in the example above, the increase in the required down payment is $15,000. This may be significant to some, insignificant to others but this will without a doubt have a positive effect on the housing market overall and may help cool the unprecedented growth of the freehold sector.

More importantly, I expect this change to further increase demand and interest in the condominium market and will encourage appreciation for condominiums priced below $500,000.

Merry Christmas and Happy New Year Everyone, see you in 2016!