How does today’s message from the Federal Government’s Finance Minister Jim Flaherty affect your next real estate purchase?
“It will have a minimal effect on new home purchases” said Greg Hamre of The Hamre Team at RE/MAX Metro City Realty in Ottawa. The biggest impact will be on real estate speculators and non-owner occupied rentals. “All and all the announcement was not as heavy as expected.” For the time being you can still purchase a primary residence with a minimum of 5% down and this will not change from today’s announcement.
The new rules which will come into effect on April 19th, 2010 will be as follows;
For properties that are not your primary residence. You will be required to have a minimal down payment of 20% to qualify for CMHC financing as opposed to the current 5% minimal rate. This will not apply to owner occupied-rentals such as duplexes.
First mortgages will need to be approved at a 5 year fixed rate mortgage, regardless of whether you are searching for a loan with a lower rate and/or shorter term of less than 5 years. This will be the biggest impact to the main stream purchaser and will require them to purchase a house at slightly lower price point. For the average first time home buyer this will be in a value of approximately $20,000 less.
For those that have purchased a home with a closing date after April 19th2010, we would advise you to speak to your Mortgage Lender and lock in before the new rules take effect.