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Can You Get 400% ROI From Investing In Toronto Condos?

Originally posted on: March 28, 2015
Last updated on: June 15, 2016
Filed under: condo investment investment financials toronto condos new condos real estate investment roi condo deals pre-construction condos


Originally posted on: February 18, 2015
Last updated on: February 18, 2015
Filed under: art shoppe condos midtown condos midtown yonge and eglinton yonge and eglinton condos new condos toronto condos art shoppe art shoppe condo

Hold your breath Yonge and Eglinton buyers. Art Shoppe Condos is coming to midtown

Originally posted on: February 6, 2015
Last updated on: February 18, 2015
Filed under: art shoppe condos midtown condos midtown yonge and eglinton yonge and eglinton condos new condos toronto condos art shoppe art shoppe condo

Our 5 Favourite New Toronto Condo Developments Of 2014

Originally posted on: January 29, 2015
Last updated on: January 29, 2015
Filed under: monde condos new condos toronto condos condos toronto condo yc condos 50 wellesley alter condos code condos forest hill yonge college yonge wellesley east bayfront waterfront condos toronto waterfront

Seasons Greetings | Merry Christmas & Happy New Year

Originally posted on: December 25, 2014
Last updated on: December 31, 2014
Filed under: 2015 new year 2015 year christmas merry christmas love joy gift giving seasons greetings thank you holiday holiday season grateful best wishes

Government Cooling Housing Market with changes to Mortgage Regulations

June 22, 2012 - Updated: October 8, 2012


With Canadian interest rates, expected to remain at record low for the foreseeable future, the Canadian government is getting creative to try to cool down the Canadian housing industry.

On June 21st, the Federal government confirmed that they will be creating new rules governing the Canadian Mortgage and Housing Corporation. The biggest change Finance Minister Jim Flaherty announced during the press conference is that the maximum amortization period will decrease to 25 years from 30 years.
According to Flaherty, the new regulations will make sure consumers, who continue to take on more debt, will be able to purchase the right home for their needs.


“...they’ll buy a less expensive home or a less expensive condominium. Good. I consider that desirable,” he said during the press conference. “So if it has that kind of a cooling effect that to me is a good thing.”


The new regulations will not take effect until July 9 therefore, investors and potential home buyers have some time to adjust to the market.


If you are interested in having the flexibility of lower monthly payments you should talk to us at your earliest convenience to get the details on how these new rules will impact your plans for buying a new home.



Higher Monthly Payments versus Lower Total Interest

The shorter amortization period definitely has its pros and cons and now is the time to see, which scenario fits your lifestyle the best.


Because of the shorter timeframe, homeowners will be forced to make higher monthly payments.


For example: a $300,000 mortgage spread over 30 years - with an interest rate of 4 per cent - would cost $1,426 a month. Because of the changes, that same mortgage amortized over 25 years increases the monthly payment by $152 to $1,578 a month. That is an increase of 10%.


However, the positive news is that the shorter amortization period means that homeowners will end up paying less interest. Taking our previous example, the total interest payments on a 30-year mortgage would total $213,558.91, but only $173,416.20 on the 25-year one.



Home buyers encouraged to take on less debt

Currently anyone who can’t afford a 20 per cent down payment is forced to get insurance through the CMHC, which means they will have to qualify under slightly stricter debt requirements.


Some of the other changes to the mortgage industry include:

  • Reducing the amount of equity homeowners can take out of their homes in a refinancing to 80 per cent from 85 per cent.

  • Capping cap the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent to qualify for CMHC insurance.

  • ​CMHC insurance is only available for mortgages under $1 million.

Many analysts including Frank Techar, head of personal and commercial banking at BMO have pointed out that the growth in the Canadian housing market is unsustainable and if the government didn’t start incorporating these new regulations, it could lead to a bubble scenario. I agree with these analysts and believe that Flaherty’s announcement will provide long-term stability in the Canadian housing market.


Minister Flaherty has tapped the brakes at precisely the right time and his actions should help ensure Canada's housing market experiences a stable growth.


Please feel free to conact me if you have any questions.

Have a great month and enjoy the warm weather. 

Sunny xx


Tagged with: canadian mortgage cmhc housing market jim flaherty amortization
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