5 Key Facts You Need To Know About Canada’s New Mortgage Rules

For those who’d like to buy some properties in Canada, these new rules may be a bit of a headache. For homes costing between $500,000 and $1 million, a larger down payment is needed. The changes in the law is to quench the heated real estate markets. Here are the five things you must know about Canada’s new mortgage rules:

Show Me The Money

The new rules require a down payment of 10% for the portion of the price above $500,000. This means for homes $700,000 and over (which is basically most listed homes in Vancouver and Toronto) buyers will have to cough up $45,000 minimum up by $10,000 under previous rules. Homes over $1million dollars require a 20% down payment

Impact On The Market

The impact is not expected to be grand; Finance Minister Bill Morneau is confident that it will affect only 1% or even less of the market. Mainly these will be home buyers in Toronto and Vancouver.

Sales Activity

It was expected by analysts that the planed increases in down payments will trigger a spike in sales activity by buyers to avoid paying the extra cash. Sales activity has remained in high gear in Ontario, BC and Quebec but other variables such as a relatively mild winter and low mortgage rates are likely to have also been factors at play.

Past Attempts

Between 2008 and 2012, there were changes that were made to tighten the eligibility rules for new insurable loans. One of the changes was the increase of the minimum payment to 5%. The other two are as stated:

The reduced amortization period from 30 years to 25

The maximum insurableĀ  house price was capped below $1 million.


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