The government of Canada announced some changes in an attempt to cool the heated market. Mainly aimed at Toronto and Vancouver but it will take affect across Canada. Several changes were made to close tax loopholes and reduce the risk the government has in insuring mortgages for people who put less than 20% down payment.
If you were to buy a house today with less than 20% down, assuming the home is under $1,000,000, then the government insures it through CMHC. Side Note – Homes over $1,000,000 require minimum 20% down. If you’re buying a house in Barrie, and you need a mortgage then its important to note the new regulations.
The one new piece that will affect people the most is that instead of having to qualify for the mortgage at the current rates they have to qualify at the posted rate. Right now you could potentially get a five year fixed mortgage at 2.44% interest when buying your house here in Barrie. However, as of October 17th, you will need to qualify at the benchmark rate of 4.64%.
How could that affect you?
If you’re buying with your significant other and you have a household income of $100,000, no debts, and a 5% downpayment that means before October 17th you would have potentially qualified for a purchase of up to $484,000. After October 17th though you will only now qualify for a purchase price on a home of $421,000.
It remains to be seen what kind of impact this will have on the Barrie market. At those prices you can still get a home in Barrie. For those living in Toronto, this type of change can be the difference between getting a home or getting a condo instead. That’s a major difference for many.
Its important not to over-leverage yourself when buying a home so ultimately this could help keep many people above water if and when the interest rates rise.
