No one likes change, especially future homeowners as the change relates to the mortgage rules. Every time the rules change, they only seem to make it harder & harder for folks to qualify. Well in my humble opinion, the latest change announced by the Finance Minister in December could have been more massive.
The Finance Minister Bill Morneau announced that for properties between $500,000 and $1 million, those of you getting an insured mortgage will now need to put more down—up to an additional 2.5% of the purchase price if you max out at the 1.0 million mark. Suppose you were looking at a million-dollar home today (a starter in Vancouver and mansion in Nova Scotia), you would be required to come up with $50,000 (5%) but after February 15th it will be $75,000 (5% of the first $500K and 10% of the remaining $500K). While an extra 25K or 50% increase in the premium on a million-dollar home isn’t exactly pocket change for those of us whose last name isn’t Hilton, it could have been worse. Some analysts were predicting a minimum 10% across the board while others were even going as high as 15%.
For a $750,000 property, you’d have to cough up a 33% bigger down payment (compared to today), or another $12,500. The new rule doesn’t affect properties over $1 million because they don’t qualify for high-ratio mortgage insurance and are required to have borrowers put down 20%.
So if you’re currently shopping for a home, while the change may not be what you wanted to hear, just keep in mind you’ve still got till February 14th (Valentines Day) to squeak in under the current mortgage rules. This doesn’t mean you have to move in by that date, it just means that you have to be approved for the purchase with the insurer (CMHC, Genworth or Canada Guaranty) by that date. In fact, you have until July 1st (Canada Day) to close on the purchase, the closing date that it officially becomes yours and you get to start paying for it!
Auxilium Mortgage is a BC based mortgage brokerage, Auxilium translated from it’s Latin to English is “to care, aid, assist & support” and that’s exactly what the team at Auxilium does day in and day out, give them a call toll-free at 1-855-590-6520 today!