The new Canadian Mortgage rules take effect on Feb. 16th 2016.

 Are you ready?

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On February 15, 2016, minimum downpayment rules are changing in Canada – for homes worth more than $500,000. The change is straightforward: for any portion of the house price over $500,000, buyers will need to provide 10% downpayment for an insured mortgage. The minimum downpayment for the first $500,000 will remain unchanged at 5%.

How much difference could it make? Here’s a simple example:

Right now, you could get a mortgage for a $750,000 home with a downpayment of $37,500: a simple 5% of $750,000. Once the new rules kick in next month, you’ll need $50,000 downpayment for the same house: 5% for the first $500,000 ($25,000), plus 10% for the $250,000 over the limit (another $25,000).

The change was announced in mid-December by the new Liberal Finance Minister, Bill Morneau. While most Canadian homebuyers will be unaffected, the move is designed to protect Canadian homeowners by ensuring a stronger equity footing in their homes.

Here’s a simple chart that illustrates the impact of  the new Canadian Mortgage Rules:

New Mortgage Rate Chart

Please be careful on the timing.  You will need a mortgage approved before February 15 2016 to qualify under the old 5% rules AND your purchase must also close before July 1, 2016.  If you need any more info, I would be happy to help.  Just give me a call, email or text


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