Homebuyers in Canada are facing larger down payment requirements for properties over $500,000. The changes are intended to cool the hot markets in some of Canada's urban centers like Vancouver and Toronto where prices have soared in recent years.
Here's what you need to know:
More cash down for high priced homes. The new rules require homebuyers put down 10% on the portion of the home over $500,000. So on a $750,000 would have required a minimum 5% down payment of $37,500 and under the new rules the first $500,000 only requires 5% but the next $250,000 would require 10% for a total down payment of $50,000. Homes over $1,000,000 still require the 20% down payment as before.
How does this impact? This will likely have the most impact in the bigger urban markets. When the change was announced in December by the new Liberal government, Finance Minister Bill Morneau estimated it would affect less than 1% of the market. In smaller markets like Peterborough this likely won't have an impact as home owners looking to upgrade in this market have likely built up equity beyond this percentage.
Sales run up to the new rules took effect. Realtors were forecasting a surge in sales leading up to the changes and by all accounts that has been the case. The final numbers are still coming in but the first five weeks have been brisk but some think this may have also been a result of the mild weather across much of Canada.