October 2014
The average price of a detached home in the GTA reached $804,330 as of September 30, 2013.
This requires a down payment of at least $200,000 (25%) and a household income of about $160,000. Both down payment and household income are beyond what most can afford.
More than one in four renters have less than $5,000 saved for a down payment which makes owning a detached home too costly. High ratio mortgages, those requiring less than 20% as a down payment, are an option. They are considered to be riskier mortgages for the lender. They require a higher monthly payment and a higher amount of interest being paid over the life of the loan.
The minimum down payment for a high ratio mortgage is 5%. This is a $40,000 cash requirement on that average priced detached home in the GTA.
Condominiums provide a less costly alternative.
Purchase a $400,000 condominium instead of a detached home and $20,000 (5%) is needed for the down payment. Along with this lower cost is a smaller size but also lower maintenance costs and more amenities.
Judging from the growth in condominium construction, this combination appeals to a growing segment of the population.
