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Should a five per cent down payment be a requirement for attaining a mortgage?

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Real estate Pat | 11 Feb 2015, 10:22 AM Agree 0
With all the debate in the industry about the level of mortgage debt in Canada, I wonder what the popular opinion is? Should a five per cent down payment be a requirement for attaining a mortgage?
  • YQL-Agent | 11 Feb 2015, 11:32 AM Agree 0
    I believe 5% down should be mandatory as the lender needs some sort of equity in the house just to try and have a few dollars in equity in case they have to foreclose. 5% won't cover the banks cost to foreclose, but it helps. It also adds a measure of responsibility to save money for what you want in life, which is a good societal practice. However, with folks living longer than ever, the need for longer amortization needs to be addressed. I believe that there should be 30 year amortizatios for 5% borrowers. That is a way to lower the payment a little and it's not that big of a deal out the back end to add 5 more years.
  • JeffWall | 12 Feb 2015, 01:47 AM Agree 0
    I think it should be there, as the previous poster had said if there is a foreclosure the lender needs some sort of equity in the house. I got a mortgage from a mortgage broker in Ontario ( Northwood Mortgage ) and it seemed reasonable for me. There are lenders who offer free down payment mortgages but know that these are not for real. they will probably find another way to get money from the us. So it is always better to go for a mortgage with down payment or else you will end up paying more.
  • Scott | 21 Feb 2015, 11:53 AM Agree 0
    My understanding is that a 5% down payment currently is only allowed for your personal residence and that investment properties require a 20% down payment. Am I correct?

    I assume the banks think investment properties are riskier mortgages than your personal house is. Vacancies, vandalism, etc and they figure the higher down payment from you limits their risk to 80% instead of the 95% risk they have with your personal residences.
  • Gerry | 04 Mar 2015, 01:18 AM Agree 0
    Put yourself in your bankers shoes. The more skin you have in the game raises your bankers confidence that they won't get stuck with your dream if things don't work out. 0 to 5% you could walk away from, 20 to 25% you will protect and make sure things work for both of you.
  • james739 | 21 Sep 2015, 08:39 PM Agree 0
    Like the others said, for investment property you need 20%. Unless you purchase a duplex or triplex, live in one of the units and rent the others. Since it's your primary residence, you should be able to put down 5%
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