80,000 variable-rate mortgages will reach their trigger point by year-end: RBC + MORE Aug 27th

TD Bank and CIBC released their third-quarter earnings results on Thursday, and both provided updates on their variable-rate mortgage balances.

Whether it’s for a cottage, a vacation home or a rental property, using your home’s equity can be an excellent way to buy that second home you’ve been dreaming of. 

“Potential buyers may not have the cash they require to pay for an asset like a second home in part or in full,” says Maxine Crawford, a mortgage broker with Premiere Mortgage Centre in Toronto. “They may have their money tied up in investments that they cannot or do not want to cash in. By using home equity, however, a buyer can leverage an existing asset in order to purchase in part or in full another significant asset, such as a cottage.”  

What is home equity?

Home equity is the difference between the current value of your home and the balance on your mortgage. It refers to the portion of your home’s value that you actually own. 

You can calculate the equity you have in your home by subtracting what you still owe on your mortgage from the property’s current market value. For example, if your home has an appraised value of $800,000 and you have $300,000 remaining on your mortgage, you have $500,000 in home equity…

Buying a home is an exciting process with many unexpected costs. Beyond your down payment, you’ll also be responsible for paying legal fees, appraisal costs, title transfer costs and taxes to the province or municipality (or both). 

That last item is called a land transfer tax (LTT), and it applies everywhere except in Alberta, Saskatchewan and all three territories, which instead charge land transfer fees. Despite the differences in terminology, the idea is the same: The buyer pays a one-time fee to the local government whenever a property changes hands. Below, you will find detailed information on land transfer taxes, fees and rebates:

What is a land transfer tax?
How is land transfer tax calculated?
Land transfer taxes at a glance
Land transfer taxes and fees by province and territory
Cities that charge additional land transfer tax
What is a first-time home buyer rebate?
First-time home buyer land transfer tax rebates
Other land transfer tax rebates
Land transfer tax exemptions

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It’s not only first-time home buyers who have to adhere to Canada’s down payment rules. When buying a second property, current home owners must also meet the country’s down payment requirements, which can differ from the rules applied to single-property ownership. 

So, how much of a down payment do you need for a second home? That depends on a few factors, including whether or not you intend to live at the property. 

Down payment requirements in Canada

Every Canadian home buyer is required to have a minimum down payment when purchasing property. A down payment is the money provided up front towards the purchase of the home, and it is directly tied to the value of the property. 

When buying a home, the down payment rules in Canada are as follows:

Purchase priceMinimum down payment required$500,000 or less5% of the purchase price$500,000 to $999,9995% of the first $500,000 of the purchase price +10% of the portion of the purchase price above $500,000$1 million or more20% of the purchase price

If you’re buying a home priced under $1 million and your down payment is less than 20%, you’ll need to purchase mortgage default insurance, also known as mortgage loan insurance—which protects the lender if you can’t make your mortgage payments…

Canada’s largest bank said about 80,000 of its variable-rate mortgage clients will reach their trigger point with the next “couple of” Bank of Canada rate hikes.