Tue, February 24, 2004
Buying home about to get much easier
By JON HARDING, BUSINESS EDITOR
Buying a house got a lot easier yesterday after the Canada Mortgage and Housing Corporation scrapped its rule that forced home buyers to cough up 5% before it would approve a sale. In a move that should rev real-estate markets from coast-to-coast starting March 1, including an already robust industry in Calgary, home buyers will be allowed to finance the entire cost of a home.
You can now use a line of credit, a credit card or even get a personal bank loan separate from your mortgage to cover the 5% portion that the Crown corporation still won't guarantee.
In the past, even a gift from parents covering that '5% down' had to be accompanied by a 'proven gift letter.'
"Our mandate is to ensure housing is accessible to Canadians. This is another means of doing that," said Darrell Majdell, CMHC's regional director of mortgage insurance for the Prairie region.
"Basically, we're still guaranteeing the 95%. The other 5% will be up to the banks. With the low interest rates we're seeing now, it makes for an even better environment for the likes of first-time buyers," said Majdell.
Those in the realty industry are applauding the demise of the federal regulation first introduced in 1993.
Realtors and banks will benefit, said Don Dickson, president of the Calgary Real Estate Board.
"It's absolutely tremendous news," said Dickson, broker and owner of Sutton Group Advantage Realty.
"It opens up that field of potential buyers who maybe qualified for a mortgage, but just didn't have the resources to come up on their own with that extra $5,000 or $10,000.
"And it creates a whole new set of products for the banks in terms of providing that 5%."
Richard Corriveau, CMHC economist for the Calgary area, said people who've been saving to make a down payment can now step forward.
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