Stomp Realty Inc. (www.StompRealty.com), a full-service boutique-style realty brokerage, is weighing in on the increase of the minimum down payment percentage for Canadian homes over $500,000. —
The current standard 5% down payment needed to buy a house has been increased. In a recent announcement by Finance Minister Bill Morneau, the federal government has decided to raise the minimum down payment to 10% for homes over $500,000. (Source: “Bill Morneau tightens mortgage rules on homes over $500K,” CBC News, December 11, 2015; http://www.cbc.ca/news/politics/morneau-home-ownership-finance-1.3360610)
“This is a move Mr. Morneau and the federal government believe will look out for the long-term health of the economy and housing market,” says Erica Smith, Broker of Record at Stomp Realty. “Essentially, this is all in reaction to the booming real estate market in both Toronto and Vancouver. What Morneau and the federal government are hoping to do is more closely align the down payment with the value of the home.”
It’s important to note, however, that the 10% will be applied only to the portion of the list price that exceeds the $500,000 threshold. That means that a potential homeowner would be expected to make a down payment of $50,000 on a home worth $750,000. That figure is the sum of 5% of the first $500,000 and 10 % of the remaining $250,000.
“These are the new rules we have to deal with,” Smith continues. “As real estate brokers, we’re constantly dealing with changes in regulation. We will read over the full scope of the regulation in great detail and inform our clients how this new regulation will affect them moving forward.”
The rate increase is set to begin near the start of the 2016. Some believe the changes will only have a minimum impact on the overall housing market. However, it is young homebuyers who are said to be the ones targeted with this change.
“This generation of homeowners has never had to deal with rising interest rates,” Smith states. “By increasing the minimum down payment sum, the federal government is actually protecting these young, first-time homebuyers from that inevitability and encouraging them to invest in home ownership only when they are truly financially capable.”
As an established real estate brokerage, Stomp Realty Inc. helps first-time and recurring Toronto homeowners buy, sell or lease home across the GTA. More information about them can be found on their web site at www.StompRealty.com.
Name: Erica Mary Smith, Broker of Record and Co-Founder of Stomp Realty Inc., Brokerage
Email: Send Email
Organization: Stomp Realty Inc., Brokerage
Address: 163 Sterling Road, Unit #10 Toronto, ON M6K 2B2
Release ID: 99639