New Federal mortgage rules took effect on Monday, and if you’re in the market for Toronto, it’s likely you’ll have to come up with a substantial down payment.
Properties that cost more than $500,000 are the target of the new federal changes.
There’s no revision on the first half-million of a home purchase, buyers can still put down five per cent down, but anything above that requires at least 10% down.
The new regs are aimed at making sure buyers have adequate equity in the homes and are not taking on something that is far over their heads financially.
The federal government making several rounds of changes between 2008 and 2012, including a maximum mortgage amortization reduced to 25 years for those with less than 20 per cent down, the gross debt service limit set to 39%, the maximum borrowing amount against a property reduced to 80 per cent from 85 per cent of the value of their homes, and the elimination of Government-backed mortgage insurance on homes with a purchase price of more than $1 million.
The latest change should also weed out marginal buyers and speculators.