What You Need To Know About Changes To Canadian Real Estate Regulations
If you are considering Canadian real estate, the decision of whether you want to make a purchase or sale is likely something that you have put a great deal of thought into. You may have heard that there have been several changes to lending practices and taxation. You need to be aware of what these differences are so that you can continue to find the properties and terms that suit you best.
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 and can determine lending policies that are felt across the country.
It is the CMHC that caused two significant changes to property buying procedures for first time home buyers. Usually, a certain percentage of the property's purchase price must be furnished by the buyer separately in order to qualify for a mortgage. This is something which had held many first time buyers back from purchasing property. The CMHC changed lending practices and waived this need. Suddenly, the entire purchase price could be financed.
It led to a real estate boom in Canada. There were similar opportunities in the USA and this led to a huge increase in property sales there as well. Unfortunately, in the States, other factors such as credit history were ignored and many unsuitable individuals were allowed to purchase properties. Many of these ended up going through foreclosure and losing their properties. This is one factor that upset the economy. Therefore, to prevent the same problems from happening here, the CMHC canceled the no down payment program, something which many buyers may still be unaware of.
You also cannot amortize your property for as long as you were able to previously. Now, the forty year mortgage is a thing of the past. It was also canceled by the CMHC in October of 2008. Longer lending periods meant lower monthly payments and this was something that allowed buyers in more expensive markets to afford properties. Now, that is a thing of the past.
The first two changes occurred on a national basis but there is a 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.
As you can see, there have been some fairly significant changes to property investment in general. There will continue to be changes and so it is important to look into buying property well in advance of deciding whether or not to invest.
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