Friday, December 11, 2015

Finance Minister changes the down payment rules what does that mean for you?

New down payment rules effective Feb 15, 2016

My editorial 

Currently, home buyers must put a minimum of 5% down payment to qualify for Canada Mortgage and Housing Corporation (CMHC) insurance. Protection lenders insist on 5% down payment when providing a mortgage worth more than 80% of the home's value.

Starting February 15th, 2016, CMHC will require a 10% down payment on the portion of any mortgage over $500,000. The 5% rule remains the same for the portion under $500,000.

Once implemented, for example, someone looking to buy a $750,000 property would need to have a minimum down payment of $25,000 (5% of $500,000) plus $25,000 (10% of the remaining $250,000) for a total of $50,000 vs $37,500 (5 % of $750,000) which will be required until Feb 15, 2016.

The impact of this rule change on the overall Toronto market is difficult to estimate at this time. But it's fair to say that serious buyers who were looking at buying a property with 5% down payment will rush to buy before Feb 15, 2016! 

In my professional opinion, if you intend to put your property on the market, if you estimate the value over $500,000 and you think that your property will attract first time buyers or buyers with a limited down payment, then you should consider going to market sooner rather than later! 

There is no bad time to go to market in this neighborhood. There is an ongoing demand for good properties. I would be happy to meet with you, provide you with a complimentary evaluation of your property and discuss the best go-to-market strategy to get the maximum sale price and take advantage of the window of opportunity generated by this rule change!

If you are looking to buy a property, whether it be a condo, townhouse or a house and if you are best served by taking advantage of the current 5% minimum down payment, you need a plan to buy quickly!

Whether buying or selling, I respectfully suggest you work with a professional full- service real estate agent who specializes in the Davisville & Leaside neighborhoods. A full-service real estate agent who knows how to leverage from the opportunity created by this change and will be able to help you buy your new home successfully and sell your home at the best possible sale price. 

In summary, if you are thinking of selling a property that will probably attract buyers with a limited down payment, you need to move quickly!  If you need to buy with 5% down payment, you need to move quickly! In both cases, call me at 416-322-8000 or email me, I will be happy to help you navigate successfully through this change in process and help you reach your goal.

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