Will you live in the home? If the house will be owner-occupied, then you need 5% down for the first $500,000 of the purchase price, and 10% for any amount over $500,000 up to $999,999. If the purchase price is $1,000,000 or more, the minimum down is 20%.
Hoping to skip the cost of mortgage default insurance? Then you'll need at least 20% down. Any downpayment less than 20% of the purchase price requires this insurance, which will be added to your mortgage principal.
Buying a rental or recreational property?If it's not going to be your own principal residence, then you'll need 20% down. Genworth and CMHC have a vacation/second home program that allows you to put 5% down but mortgage default insurance will be required. Rental properties require 20% down.
Are you new to Canada? If you're a permanent resident, then you'll need the same downpayment as a Canadian citizen: 5% for the first $500,000 and 10% after that. If you are a non-permanent resident, then you may need 10% down. And if you're not a resident of Canada, then you'll need at least 35% down from your own resources (not borrowed).
Smart ways to come up with a downpayment
If you're looking to buy a second home, then your best path to a downpayment is often to refinance your existing home. A review of your situation is the best starting point.
If you're saving for your first home, here are some ways to come up with the cash:
Often homebuyers are actually closer than they think to buying that first or next property.
** This information is current as of May 7, 2019, and lending practices are subject to change at any time.
Source: Invis Financial
The Bank of Canada announced today that it is keeping its key rate unchanged. The Bank noted that while a slowing economy was anticipated in late 2018 and early 2019, the slowdown was in fact "sharper and more broadly based" than expected. While there was growth in employment and labour income, consumer spending, the housing market, exports and business investment all fell short...
The Bank of Canada announced today that it is keeping the key rate steady. The Bank continues to judge that the policy rate will need to rise into a neutral range to achieve the inflation target, but that will happen over time. Going forward, rates increases will depend on key factors – global trade uncertainty, the housing market, and developments in the oil sector. The next rate-setting day...
As many economists expected, the Bank of Canada announced today that it is increasing the overnight rate .25 per cent, noting that the "policy interest rate will need to rise to a neutral stance to achieve the inflation target." As for the pace of future rate increases, the Bank will take into account how the economy is adjusting to higher rates, household debt levels, and global trade policy developments....
The Bank of Canada announced today that it is keeping the overnight rate unchanged as they monitor the evolution of NAFTA negotiations and the outlook for inflation. Household debt levels are improving, the housing market is stabilizing, and business investment and exports are “growing solidly”. The Bank noted that higher rates will be warranted but they “will continue to take a gradual...
As many economists expected, the Bank of Canada announced today that it is increasing the overnight rate .25 per cent, the fourth increase since last summer, given strong economic improvements. The economy and job market are performing well, housing is beginning to stabilize, oil prices have gone up, exports are strong and businesses are spending. The Bank also wants to keep inflation near target. The...
A mortgage pre-approval can be an important part of your pathway to building wealth, giving you a real-world picture of your options: that is, your opportunities as well as your limitations.
A mortgage preapproval will tell you how much you qualify for (you may be pleasantly surprised), what your mortgage payments will be, and you’ll get an interest rate that will be held for a specific time period,...
It’s easy to get caught up in home buying frenzy and just focus on finding that perfect home. During all that excitement, be sure to take some time to get acquainted with a few key terms. Here are the four types of insurance you’ll encounter.
HIGH-RATIO MORTGAGE INSURANCE
If your downpayment is between 5% and 20%, you are required to have “high-ratio mortgage insurance”. This...
The Bank of Canada announced today that it is holding the overnight rate steady after raising it twice this past summer. The Bank noted that the recent strength of the Canadian dollar has slowed inflation and export growth, and that there is “substantial uncertainty” around geopolitical developments and the renegotiation of NAFTA. The Bank has therefore deemed that “the current stance...
Effective January 1, 2018, home buyers who don’t require mortgage insurance — those with a down payment of 20 per cent or more — must qualify for their mortgage at a higher rate.
This new stress test won’t apply to people renewing their uninsured mortgage.
Canada’s Office of the Superintendent of Financial Institutions (OSFI) announced these rule changes today....
When you find the condo or house of your dreams and want to make an offer, do you need a financing condition? Unless you can pay cash for the home, then yes you do. That little phrase – “conditional on financing” – is an important protection for buyers.
When an offer to purchase is made “conditional on financing”, we gain the time needed i.e. 3 to 5 days to...
As widely predicted, the Bank of Canada announced today that it is holding the key rate steady. While noting that “economic growth has been faster than expected”, the bank said it’s too early to determine if the economy is on a “sustainable growth path”, citing weakness in export growth, business investment and employment. The Bank’s three measures of core inflation,...
(Article by Invis - Canada's Mortgage Experts™)
This is why mortgage rates are suddenly way more complicated.
If you’ve been shopping for a mortgage lately, you’ll have figured out that rates can be all over the map. That’s because you’re not comparing apples to apples anymore. Thanks to new mortgage rules, the mortgage pricing matrix is much more complicated, and quick online mortgage quotes are less reliable. That’s why it’s important to have a basic understanding of the mechanics behind mortgage rates. Here’s a quick guide:
Variable mortgages and lines of credit hinge on the Bank of Canada’s “overnight rate”. Eight times a year the Bank of Canada determines if they are changing this rate. While they may hold the rate, they will increase it when the economy strengthens and inflation is a concern, and decrease it if they need to get the economy moving. It’s a careful balance. The chartered banks base their prime lending rate on this overnight rate because it influences their own borrowing. So if the central bank changes the overnight rate, it’s sending a signal to the banks to change their prime rate, which in most cases they will, passing on some or all of the change to their variable/line of credit clients.
Fixed-rate mortgages are different. Lenders use Government of Canada bonds to establish pricing for fixed-rate mortgages so you need to watch bond yields to determine where fixed mortgage rates are heading.
Whether it’s a fixed or variable-rate mortgage, the new mortgage rules mean lenders now have different rules and rates for insurable vs. uninsurable mortgages. If a mortgage is insurable, it will qualify for the best rates. Most homebuyers know that if they have less than 20% downpayment, they need to pay for mortgage insurance as a way to protect the lender. In order to obtain the lowest cost of funds, some lenders use this insurance to insure mortgages with more than 20% equity.
Mortgages that are “uninsurable” can include rental properties and second homes, switch mortgages that move to another lender, 30-year amortizations, refinance mortgages, mortgages over $1 million, and even some conventional 5-year mortgages. These mortgages are charged a rate premium and some lenders no longer offer them. Additionally, interest rate surcharges are often charged if it’s difficult to prove your income or you have bad credit, the property is in a rural location, you want a long rate hold, you want the best pre-payment privileges and porting flexibility, and you don’t want refinance restrictions. As a result, be wary of rates you see online, because you might not qualify for them.
Without a doubt, insurable vs. uninsurable has made the mortgage landscape significantly more confusing. Getting good solid advice is critical, and Mortgage Brokers have never been more important in the home financing process. We have access to all the lenders we need, and the experience and knowledge to get you the best mortgage for your situation. We are here to help you!
If you’re in the market for an insured mortgage, then you might want to get that mortgage before March 17, 2017.
Canada Mortgage and Housing Corporation (CMHC) is raising premiums for insuring mortgages on Canadian homes for the third time in three years. Canadian homebuyers are required to have mortgage insurance if they have less than a 20 per cent downpayment. The insurance...