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Finance Minister Bill Morneau announces changes to mortgages over $500,000

Posted by Anneke Cundasawmy on Friday, December 11th, 2015 at 5:25pm.

Starting February 15th, insurance-backed mortgages will require a minimum 10% down payment for the portion over $500,000. Minimum down payments remain the same for homes under $500k, or for the portion of the mortgage under $500k – however for the portion above $500k the required down payment has doubled.

 

In essence, this change will affect only 1 out of every 7 homes sold in Ottawa

Morneau says he has put this into effect largely for the Vancouver and Toronto markets, where the average house is selling for close to $1million and over $630,000, respectively.  In Ottawa, the average home sells for $380k. To give you some perspective: so far this year 106 condos have sold and 2103 homes have sold for over $500,000.

 

In his own words:

 

We did the math for you.

An example of the minimum down payment TODAY:

Purchase Price $580,000

Minimum down payment required is 5%, or $29,000

 

An example come February 15, 2016:

Purchase Price $580,000

Minimum down payment required is 5% of $500,000 = $ 25,000 + 10% of $80,000 (the portion above $500k) = $8,000 for a total minimum down payment of $33,000 which is a down payment of 5.7%

 

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