If you are hoping to invest, Canadian real estate is a topic which may interest you greatly. You may be surprised to learn that some key differences have come about in the recent past and that will occur in the near future that may radically change your ability to purchase properties. These include mortgage changes and taxation differences. Keeping on top of them can help you prevent costly mistakes that can set you back months or even years.

To understand the first change to the property market, you have to understand the role that the CMHC plays in determining home buying policy. They offer mortgage related services including mortgage insurance. Because they back the lenders who are mortgaging homes, they play a significant role in setting lending practices nationwide.

It is the CMHC that caused two significant changes to property buying procedures for first time home buyers. Usually, a certain percentage of the property’s purchase price must be furnished by the buyer separately in order to qualify for a mortgage. This is something which had held many first time buyers back from purchasing property. The CMHC changed lending practices and waived this need. Suddenly, the entire purchase price could be financed.

The mortgages were similar in many ways to mortgages in the United States. When many of these homes were foreclosed on due to questionable lending practices, this threw the practice into question. Unfortunately for many home buyers, the ability to purchase a house with no down payment was canceled by the CMHC in October of 2008. It is worth mentioning still, since many people are unaware that it is no longer available as an option. Buyers must now generally put down five percent of the cost of the structure as a down payment. There are individual banks which may offer different terms but these may be hard to find.

Another way that home buying was made more affordable was a longer time period in which to pay back the money. Usually the money to buy a home is paid back over a period of twenty or twenty-five years. This was extended and mortgages of up to forty years were available. This lowered the overall monthly payment so that people could afford a better home than otherwise would be possible. The forty year amortization period was also canceled by the CMHC in October of 2008.

There is a change which is coming for residents of Ontario. The government will be introducing a new Harmonized Sales Tax in July of 2010. This will combine the GST (goods and services tax) and the PST (provincial sales tax). It will mean that items which are currently not being charged PST will suddenly increase in price by eight percent. This is not as big a deal on smaller purchases but will affect the cost of buying a new home significantly. Unfortunately, it will also affect the cost of other house related expenses such as utility bills as these will now suddenly be subject to an eight percent increase as well.

Changes to the real estate market are more profound than just a change in buying and selling conditions. Acts like the adoption of a harmonized tax and the loss of the no down mortgages are something that you need to be aware of and prepared for.

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