TORONTO, ONTARIO--(Marketwire - Oct. 9, 2012) - It's a real estate jungle out there as Canadians are faced with longer-than-ever saving timelines, record-high home prices, and new mortgage rules that restrict affordability for first time buyers. Given these conditions, it's a formidable challenge for any prospective home buyer to enter the market. RateSupermarket.ca, Canada's independent financial rate comparison site, is easing the mortgage costs for at least one home buyer, offering the chance to win $5,000 cash towards their down payment.
"Existing house prices have increased over $60,000 on average since 2008 - despite the low current mortgage rates, it is getting harder for Canadians to get into the real estate market," said Kelvin Mangaroo, President of RateSupermarket.ca. "We wanted to give a home buyer a boost and help them buy a house."
The giveaway underscores the benefit of maximizing one's down payment, particularly in light of changes to mortgage rules earlier this year that decreased amortization periods for high-ratio borrowers. A $5,000 boost will save a homeowner thousands of dollars over the lifetime of a mortgage.
The average Canadian resale home is currently $368,000 (CMHC). Assuming a five-year fixed mortgage rate of 3.36% that stays constant, and a 25-year amortization period, the numbers would break down as follows:
- By adding $5,000 to a 5% down payment of $18,400, a homeowner will save $300/year, and $7,500 in interest over the life of the mortgage.
- Adding the $5,000 prize to a 10% down payment of $36,800, one would save $480 per year, and total interest savings of $12,000 for the life of the mortgage.
- A 15% down payment on the average home is $55,200; add the $5,000 prize, and you'd save $7,500 in interest by the time your home is paid off.
- If you've really been saving up, and have managed to set aside a 19% down payment, a $5,000 top-up will be even more significant: In addition to saving $600 per year and a total of $15,000 in interest, the prize would put you over the 20% threshold, thereby eliminating the mandatory CMHC insurance. This would save you an additional $5216 off of your total mortgage!
Whether you are a first-time home buyer or already own a home, you are eligible to enter the giveaway, which is now open and runs until November 10, 2012. To enter the giveaway, or for mortgage rate information, visit www.ratesupermarket.ca.
*Average MLS® Selling Price as reported by CMHC.
* 5-year fixed mortgage rate based on 2011 average of 3.36%
About RateSupermarket.ca (www.ratesupermarket.ca)
Over 2.5 Million Canadians have found their best rate for personal finance products on RateSupermarket.ca. Launched in 2008, RateSupermarket.ca is Canada's largest and most comprehensive rate comparison site, offering visitors transparent access to the best mortgage rates as well as credit cards, bank accounts, insurance quotes and GIC rates.