Should five per cent be a requirement?

by Justin da Rosa11 Feb 2015
The level of mortgage debt in Canada has sparked furious debate among industry professionals about qualification standards for mortgages.
“If you can’t save five per cent for a down payment, you have no business buying a house,” says Blair J. Anderson, the broker of record for Promise First Realty in Toronto. “I don’t want my clients to run into a situation where they have to get rid of the house. It’s not good for the market or for them as individuals.”
Some mortgage brokers, however, disagree.
“I think there are many good, hard-working Canadians with good credit, that make enough money to support a mortgage payment,” Hal Tagg, an Alberta-based broker and real estate agent, wrote on REP sister site, “I don't see the problem with helping them borrow the money for a down payment to help them get into their first house. If a private lender is willing to take the risk in lending the down payment money, why not let it happen?”
Tagg, who disagrees that having at least a five per cent down payment should be a requirement for attaining a mortgages, wrote the comment in response to an article about the levels of mortgage debt Canadians have accrued across the country, similar to the one published on REP last week.
According to BuzzBuzzHome, British Columbians have racked up mortgage debt faster than they’ve grown home values. In 2012, the average value of a house rose 83.7 per cent over 13 years, to $535,400 – this being before the market went ape. The amount of mortgage debt West Coast homeowners took on, however, increased more than 132 per cent over the same period to $241,800, or 45.2 per cent of the value of the home.


  • by John Walter 2/11/2015 11:27:17 AM

    My parents lent me the money for a down payment when I bought my first house. I lent both my kids the down-payment when they bought their first homes. None of us had any problems. I don't think the biggest criteria is HOW MUCH DOWN you have, but whether you CAN and WILL make the payments

  • by 2/11/2015 11:57:19 AM

    Why do they keep harping about the mortgage debt which is highly regulated????? Consumer debt is the big issue and it seems the sky is the limit on how much an individual can accumulate!

  • by Jason Clements 2/11/2015 2:05:22 PM

    The original article cautioned that just because you're approved for a $500K house doesn't mean you should buy a $500K house.

    The problem is a $500,000 house in a market like Vancouver or Toronto is a lot different than a $500K house in any other part of Canada. I agree that if you can't afford to furnish and maintain the $500K house then it's most likely more house than you need.

    However, if that $500K house is a starter house in your market then there should be some allowances for people when it comes to having a down payment (at 5% that's $25K, which is a lot).

    In a smaller market the same house could be purchased for a lot less and a lot smaller down payment.


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