Down payment increasing for homes over $500,000

Today, Finance Minister Bill Morneau, announced that the government is increasing the down payment requirements for homebuyers seeking to purchase properties over $500,000 up to $1,000,000 effective February 15, 2016. The move is designed to cool down the real estate market in Toronto and Vancouver, but could also have some effects here locally.

The main consideration will be regarding the down payment amount will increase. This change is only for home purchases, and will not affect existing homeowners. What is important to note is that the new rule only applies for the amount in excess of $500,000.

Conclusion: This may spur an early spring market for homes in that price point in an effort to get ahead of the rule change. Morneau had noted that the change will affect only about “1% or less of the population” in a news conference today. The plus side is you are putting in more towards your purchase, and will be building equity faster.

Mark Brennan
Mortgage Broker/Owner
First Start Mortgage

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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