There has been a lot of buzz about the economy with the price of oil. Alberta is especially affected and it seems silly to think that there has to be some rules created to temper real estate markets when the economy seems so slow. The reality of the situation is that not the whole country is feeling the same pinch as Alberta and Calgary. Being in the Calgary mortgage broker market we see a slow down in purchases but other provinces are still going strong. The government brought in some new rules to slow the trends in Vancouver and Toronto, but what does that mean to home buyers in Alberta and their house buying aspirations. Here it is very simply put….
The rules before Feb 11, 2016 stated that you could purchase a home under one million dollars as a first time buyer with %5 down. Anything over one million still requires a %20 down payment. Now the rules have changed for purchasing a property between $500,000 and $999,999. In this price range the deposit has gone from %5 to %10 down. This does not effect down payments as we initially thought. The first $500,000 of the purchase price still requires a %5 down payment but the remaining balance from 500,000 to XXX,XXX requires %10 down. Here is a breakdown.
Deposit before the rule change:
Total mortgage : $700,000
deposit: $700,000 x %5 down = $35,000 down
Deposit on the same property now. This requires two calculations:
total Mortgage: $700,000
deposit on first $500,000 x %5 = $25,000
deposit on the last $200,000 x %10 = $20,000
total deposit = $45,000
As you can see the difference now is a $10,000 deposit for the mortgage of $700,000 from the old rules to the new ones. In all of the articles you can read out there everyone is saying that this is to temper the Vancouver and Toronto markets but it does effect the Calgary mortgage market. There are a lot of properties in Calgary that are affected with the new rules. Some have rushed to try and finish their purchases before the new rules took affect but now they are here and we have to deal with them. As a Calgary mortgage broker we specialize in helping people understand all the guidelines and rules that apply to each persons situation. We work with you to find the best course to take while buying your house.
A combination of the new down payment rules and the down economy has really slowed the purchases of homes over 500,000 in Alberta but it has not stopped in completely. The banks have really clamped down on the mortgages that they are accepting and its getting harder for people to make purchases. This is where we come in again. We are here to help people find a lending solution when the bank says no. If you have been turned down by a bank or another broker for any reason there is a chance that we can find a solution for you. Private mortgages in Calgary are on the rise and it could be the answer to your problems. Right now is a buyers market but it may take some work to get it but you may be able to take advantage of the market to get in to the home that you want.
Call us with any questions you may have