Breaking News - Mortgage Down Payment Change

[bizaro86]

Originally Posted by darklord700

The rule change will affect mostly highly leveraged speculators/investors. Those with like $100K cash and could have bough 5 revenue properties before and now can only buy 3 or 4.

Rental properties have been minimum 20 percent down for awhile.

[Deegee]

Originally Posted by Bill Bumface

Banks that allow this should have people lose their jobs and whatever certifications that allow them to issue mortgages. If it's a corporately condoned practice, executives should be charged for it.

These rules are important to protect people from losing their houses, and also keeping artificial inflation of prices for everyone due to loose credit, and it seems so slimy how banks will do anything to get you to sign a massive loan you will be paying back the rest of your working life.

The problem is that the competitive market place breeds this type of behavior. If you don't follow the unwritten norm, you won't be writing any business.

You can offer the advise all you want, but consumers just don't care and want the biggest and best so they can impress their neighbors. If you work as a lender and you don't do it, they will down the road.

If regulation is what people want, then the government needs to eliminate these loopholes, and not expect the market place to eliminate loopholes itself.

[Calgary14]

I can still remember when people could go zero down, 40 year amortization

[Travis Munroe]

My views echo that of most of you!!

The only price range this really hits is 750-1m and it is a great move as in reality, you should not be buying a house for 800k if you just saved up your 40k.

It really makes next to no difference on the 500-600ish priced homes and even those up to 1 million, this is only going to strengthen the overall system in the long run. I like the move!

Everyone has different strategies on how much to put down and there is nothing wrong with putting 40k down on a 800k home assuming you have extra cash and are simply taking advantage of the cheap borrowing costs.

[Mortgage Made Easy]

Well said Realtor 1

[mrkajz44]

Originally Posted by Calgary14

I can still remember when people could go zero down, 40 year amortization

When I started I didn't go zero down, but got max amortization (I think it was only 35 years at that point). It was a great strategy as I was just starting out. I was allowed to increase my payments by 25% and lump sum per year of 25%, so if I had the money it was easy to put it on the mortgage. However, if my income source dried up suddenly, I could fall back on the teeny tiny payments a 35 year mortgage offered.

[Travis Munroe]

Originally Posted by mrkajz44

When I started I didn't go zero down, but got max amortization (I think it was only 35 years at that point). It was a great strategy as I was just starting out. I was allowed to increase my payments by 25% and lump sum per year of 25%, so if I had the money it was easy to put it on the mortgage. However, if my income source dried up suddenly, I could fall back on the teeny tiny payments a 35 year mortgage offered.

And had even half of buyers approached it this way we would still have the 35-40 year mortgage being offered (perhaps limited to first time buyers only or a max age limit)
Instead of using it as a safety blanket it was often used a a extra allowance on depreciating goods such as cars, electronics, etc.

All in all, I think Canada has stayed ahead of the curve in preventing any major collapse and while more money up front today might not be every buyers dream, knowing that the value of your home is not going to plummet overnight along with the equity due to a collapse in the luxury market should make one feel better.