Toronto Real Estate
Toronto Real Estate listings and Relators
New Mortgage Rules
To address the first of two changes, condominium purchasers used to be able to qualify for their mortgage based mostly on a 1 year variable rate that tends to be alot lower than a 5 year fixed rate. An example is with financial institutions existing 1year variable rates between 2%-2.25%, and 5 year fixed rates going for around 3.49%-3.6%, this equates to almost a 1.5% interest rate difference on your payments. Buyers simply require to meet the criteria for mortgages based on the top month-to-month mortgage payments. You will not have to get the 5 year rate, but must qualify based on the 5 year rates.
The following change in Canadian mortgage system provides that investors looking to either produce rental income, or remodel also flip property, must have at least 20% down payment. This rule will get several speculators out of the investors market and will control a market downturn. In a declining real estate marketplace, investors who purchase properties with a 5% down payment in order to repair or flip are at top risk of loosing their property. If the market declines by 10% and there is only 5% equity in the house, the investor in already in a negative equity position. (ie: -5%) In a down market it also will become more complex to sell the renovated property, which means the investor will have to carry the mortgage fee for more time than originally thought, consequently is at danger of loosing their property. In the other situation where an investor leases the income property out to a renter, if the renter stops paying the rent, the landlord must cover the mortgage carrying costs. If the landlord only put 5% down on the mortgage, the carry costs will be alot higher than if they put 20% down. This type of investor is at risk to loose their house as well.
The fresh rules will be in effect as of April 19th, and will get rid of several of the speculative investors, and buyers who cant afford to get a mortgage at the 5 year rate. Hopefully this will balance out the supply/demand situation in the Mississauga condo market, as less people will be actively in the market to buy property. This will generate a marketplace where supply of quality housing will continue to increase, as demand declines based on people who do not meet the criteria for mortgages under the new regulations. In turn, it will be easier for purchasers to buy property without competing in multiple offers. However, until these new mortgage rules come into effect, it remains to be a great time to sell your condo, as prices remain high, inventory remains small, and Demand continues to be driven by first time buyers.
Check out www.canadadeals.ca for all Mississauga Brampton and Toronto Real Estate and many different companies and realator to choose from.
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