New Canadian Mortgage Rules
Insured Mortgages must undergo a stress test
The finance Minister just announced yesterday new Canadian mortgage rules. The rules include tightening the influx of foreign money and also home-owners needing mortgage insurance can afford their home. Some mortgage companies are offering rates as low as 2.14% on a 5 year term mortgage. The new rules states if you have 20% or less of a downpayment you will need to qualify to carry the mortgage based on the current bank rate. The bank rate today is 4.74%. Here is a breakdown on a $300,000 home so you get a general idea.
A $300,000 with 15% down @ 2.14% (5year)term= $1104.57
A $300,000 with 15% down @ 4.47% (5year) term= $1407.11
As you can see this will be a big factor on the house price you may qualify to purchase. In my opinion I don’t see this is bad thing. If interest rates do go up eventually this may prevent a lot of homeowners from losing their home.
Foreign buyers are to pay capitol gains tax
As you may have heard all over the news lately is that Vancouver and Toronto have had a massive influx of foreign buyers/investors mainly form China. Especially Vancouver which earlier this year caused the government to place a 15% land transfer tax just for foreign buyers to slow down the market and help keep prices somewhat affordable. Well up until now foreign buyers/investors have been claiming there properties as primary residents to avoid paying the costly capitol gains tax.
Well thankfully Ottawa has stepped in and made it so Starting now,”an individual who was not a resident in Canada in the year the individual acquired a residence will not be able to claim the exemption for that year,” Morneau said. Housing affordability has been a real big issue especially in big cities so hopefully this will stabilize home prices for Canadians who may have had trouble affording a home in one of these cities.
Andrew Weaver is a licensed Realtor® with the Southern Georgian Bay Real Estate Board serving Wasaga Beach, Collingwood and Clearview Township.