Pattie Lovett-Reid: Let the borrowing begin – responsibly – CTV News + MORE Aug 24th

Pattie Lovett-Reid: Let the borrowing begin – responsibly  CTV NewsCanadians with lowest credit scores led wave of pandemic credit card debt repayment  Yahoo Canada FinanceThe pandemic has Canadians paying down non-mortgage debt at fastest pace since 1980s  CBC.caCanadians paid down record amount of debt amid pandemic, StatCan says  CTV NewsCanadians paid down record amount of nonmortgage debt in first year of COVID-19 pandemic: Statscan  The Globe and MailView Full coverage on Google News

Last month, the Bank of Canada released their Monetary Policy Report – or in plain English, their economic forecast. It’s a document that lays out their predictions for the future of the Canadian economy including GDP growth and inflation rates. Of course, there’s a lot of interesting information here. But if you’re a homeowner that carries a variable rate mortgage, you might be concerned mostly with their inflation projections. Why? Inflation typically impacts interest rate movements. 

As we know, inflation has been an ongoing conversation. Supply chain disruptions and rising gas prices related to the pandemic have caused higher than average inflation, which would normally be a cause for concern for homeowners. If inflation goes up, the policy rate goes up. That means more money out of pocket every month. 

In this situation, however, there are reasons to be optimistic. The Bank of Canada seems committed to keeping the policy rate low stating that there likely won’t be a change this year and for most of next year…

When you buy a house or a condo, there are minimum down payment requirements to consider as you make your financial arrangements. If the purchase price is $500,000 or less, you need a 5% down payment. For properties between $500,000 and $999,999, there is a 5% minimum on the first $500,000 and 10% on the remainder. For properties worth $1 million or more, you need a 20% down payment. 

If you are buying a property with the intention to rent it out to tenants, you need a 20% down payment regardless of purchase price. 

Borrowers who are self-employed or who have poor credit may require a down payment that’s larger than the minimum. 

For those purchasing with a down payment of less than 20%, Canada Mortgage and Housing Corporation (CMHC) mortgage default insurance is required, in order to protect the lender from the higher potential for default in a high-ratio mortgage. The premium (the amount you pay) for this insurance ranges from 2.8% to 4% of the total mortgage. Premiums in Saskatchewan, Ontario and Quebec are subject to provincial sales tax as well…