Buying A Condo

If you are hoping to invest Canadian real estate is topic which may interest you greatly. You may be surprised to learn that some key differences have come about in the recent past & that will occur in the near future that may radically change your ability to purchase properties. These include mortgage changes & taxation differences. Keeping on top of them can help you prevent costly mistakes that can set you back months or even years.

Anyone who is interested in Canada’s property markets needs to be aware of the role that the CMHC plays in financing homes. It has a number of different programs aimed at helping people get into homes. It also provides mortgage insurance & can determine lending policies that are felt across the country.

One of the programs that was very popular was the no down payment mortgage. This allowed first time property buyers to avoid finding the five percent of a property’s purchase price that was originally required. In fact it was this lack of a down payment that allowed many people to afford their first property. Because of this many people jumped on the purchasing band wagon & managed to finance their first property.

The mortgages were similar in many ways to mortgages in the United States. When many of these homes were foreclosed on due to questionable lending practices this threw the practice into question. Unfortunately for many home buyers the ability to purchase a house with no down payment was canceled by the CMHC in October of 2008. It is worth mentioning still since many people are unaware that it no longer available as an option. Buyers must now generally put down five percent of the cost of the structure as a down payment. There are individual banks which may offer different terms but these may be hard to find.

The ability to amortize your mortgage over a longer time period has also ended. Typically buyers will choose to finance their properties over a twenty or twenty five year period. For a time it was possible to amortize your purchase over a forty year period but this is no longer an option. The CMHC canceled this program at the same time as it canceled zero down payment mortgages. This may end up causing problems for people who are trying to buy into markets where purchase prices are much higher. Cities such as Vancouver & Victoria on the West Coast have very high land prices. Many people cannot afford to purchase there with a standard twenty five or thirty year mortgage.

The first two changes occurred on a national basis but there is major change that will affect Ontario residents. In July 2010 Ontario will be adopting a harmonized tax that combines two current separate taxes. This means that buying a home will suddenly cost eight percent more.

Changes to the real estate market are more profound than just a change in buying & selling conditions. Acts like the adoption of a harmonized tax & the loss of the no down mortgages are something that you need to be aware of & prepared for.

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