Buying a second home: How it works in Canada + MORE Sep 25th

A FOUR PART SPECIAL EDITION… PART 1 of 4

Canada’s mortgage lending rules and policies are broken.  They just don’t work.  And the more our Federal government tries to help, the worse it gets.  Message to the government… STOP TRYING TO HELP!.. CAUSE YOU AREN’T! 

And if you think the interest rate cuts will solve all of this, guess again. There’s a lot more to it.

The dream of home ownership doesn’t need to end. It’s part of our social fabric. We need to reverse this trend. 

I’ve put together a summary of mortgage rule changes starting from 2006 to show how just 18 years ago, it was way easier to buy a home.  From 2006 to 2008, the government promoted home ownership by extending amortizations up to 40 years and interest only payments. They allowed for lower down payments or even $0 money down mortgages.  

Then, after the US subprime mortgage crisis of 2008, everything would change.  The pattern would be and has continued to be a mortgage lending rule tightening strategy…

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…

A weekly review of the latest mortgage and real estate news, a recap of key headlines, and a preview of upcoming economic releases.

As a follow-up to last week’s announcement, the federal government has unveiled a more detailed framework for its updated mortgage rules, which are set to take effect on December 15, 2024.

What does it take to buy a second home in Canada? There’s a lot to consider, from figuring out whether you can afford to buy a second property (and whether it’s worth it) to navigating the down payment requirements and mortgage rules. To help you get started, we’ve answered these questions and more.

Table of contents: Buying a second home

Second home or investment property: What’s the difference?

The rules for buying a second home in Canada

Affording a second home

The best mortgage rates in Canada

Financing your second home

The best HELOC rates in Canada

Is buying a second home worth the investment?

The tax implications of buying a second home

Second home or investment property: What’s the difference, and does it matter?

Generally, a second home refers to a real estate property that is owner-occupied, meaning the owner will be living in it at least part of the time. It can refer to a cottage, a vacation home or a weekday residence (like a condo) for someone who commutes far to work in a city…