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Banff Housing Corporation

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1. What is the Banff Housing Corporation (BHC)?

The Banff Housing Corporation (BHC) is an arm’s length, non-profit corporation owned solely by the town of Banff. The BHC’s mission is to contribute to a healthy and balanced community by providing a wide range of value priced housing, both for purchase and for rent, for residents of Banff. The Corporation was created in 1993.

2. Who oversees the BHC?

As the BHC’s sole shareholder is the Town of Banff, the sitting Council represents the shareholder. The shareholder appoints a Board of Directors that governs the administration of the BHC. The Board includes: one Councillors from the TOB; four public members; and one senior administrator from the TOB.

3. What is the BHC’s focus?

The BHC’s focus is to provide value-priced home opportunities for residents of Banff by developing lands within the Town of Banff boundary and offering them via sub-lease. Although, for simplicity, we refer to “homeowners” and “home ownership” throughout these FAQs, the proper legal terms would be “sub-lessees” and “sub-lease tenure.” BHC sub-lease

4. Does the BHC have rental units?

The Banff Housing Corporation has a total of 134 rental units, and is one of the Town of Banff’s largest affordable rental housing provider. Three units are located in the downtown core and the remaining 131 units are located at 547 Coyote Lane, known as Ti’nu apartments. These units are a mixture of studio, one bedroom, 2 bedroom and A Frame style apartments. Eligibility criteria and applications can be found at Banff.ca/housing. Banff.ca/housing

5. How the BHC ownership properties are kept “value-priced”?

The BHC has two different ownership models for maintaining value pricing through multiple owners – equity share and price restricted.

6. What is the equity share model?

The BHC owns a percentage of the home (anywhere from 13.2 % to 35.32%), and the homeowner pays for and owns the rest. When the home is sold, the BHC can choose to continue in this arrangement with the new buyer, so that the new buyer pays for less than 100% of the market value of the home. Over time, if house prices increase, the dollar value of the BHC’s share and the dollar value of the homeowner’s share both increase at the same rate.

For example, say the following property was constructed in 2001:
Ownership breakdown: 72% Homeowner/28% BHC

Home Owner Equity Share -72% (Cost to new Buyer) $216,000
BHC Equity Share (28%): $84,000
Fair Market Value (FMV) of Property: $300,000

In 2018 the same house is now valued at a fair market value (appraised value) of $850,000. The BHC has listed the house and found a registered purchaser for the property. The following breakdowns shows the cost to the buyer and the equity share for the BHC.

Ownership breakdown: 72% Homeowner/28% BHC

Home Owner Equity Share - 72% (Cost to new buyer) $612,000
BHC Equity Share (28%): $238,000
Fair Market Value (FMV) of Property: $850,000

If the BHC decides to continue in the equity share arrangement with the new buyer, then the new buyer is acquiring the home will pay $612,000 and the BHC will retain the equity of $238,000 for a total (Fair Market value of $850,000)

7. What is the price restricted model?

The BHC owns a percentage of the home, and the homeowner pays for and owns the rest. The future resale price of these properties is tied to a price restriction of two percent per annum, compounded annually. The price restriction is tied to the amount the purchaser paid for the unit when the property originally sold.

8. How many units has the BHC developed?

As of January 2019 the BHC portfolio has grown to 317 units consisting of both homeownership and rentals units. Within BHC portfolio the BHC has built 304 units, and acquired 13 units. Of the 317 units, 134 are rental apartments and 183 are home equity share properties. Banff Housing Corporation Portfolio

9. Can anyone buy a BHC property?

Anyone who meets Parks Canada’s eligible resident requirements and who will meet the BHC’s sublease requirement of owner occupancy can own a BHC property. However, potential buyers are prioritized on a Registered Resale List. How to Buy a BHC Property

10. What is the head lease?

The head lease is the original lease directly between the land owner (Parks Canada) and the tenant (in our case, the BHC), typically the BHC head lease is for forty-two years. If you have questions about the implications of living on Parks Canada leased land please discuss this with your lawyer.

11. What is the BHC’s sublease agreement?

The Sublease is between the BHC and the homeowner. The articles that the BHC is bound to through the head lease form part of the BHC’s sublease agreement. In addition to those the BHC’s sublease does contain other articles. The term of the sublease will be slightly shorter than the term of the BHC’s head lease and will vary by sublease. Banff Housing Corporation Sub-Lease

12. What is the annual administration fee?

The BHC charges each homeowner an annual fee to cover a portion of the administrative cost of the BHC. These fees include maintaining records, daily administrative duties, administration of the registered resale list, home showings, open houses and coordinating the sale of properties. Once a property is sold, other administrative fees will apply (consent, assignment of lease etc.). The admin fee is set by the BHC board of directors, and is subject to change. Whenever a change in the fee is proposed, homeowners will be notified and given a chance to provide feedback. (Article 3 of the sub-lease). BHC sub-lease

13. What is meant by “owner-occupied”?

BHC homes must be used as the homeowner’s primary residence. If the homeowner wants to rent out his/her home, he/she must make a formal request to the Board of BHC, which may or may not be approved. (Article 4 of the sub-lease). BHC sub-lease

14. Who’s responsible for taxes, utilities and insurance?

Homeowners are responsible for one hundred percent of all rates, taxes, duties, utility charges, assessments, and other charges. Homeowners must always keep the property properly and fully insured and must pay all associated costs. (See Articles 6 and 10 of the sub-lease). BHC sub-lease

15. What key decisions does the BHC make when a property is sold?

When a formal offer to purchase is made on a property, the BHC Board is required to make three choices:
1. Whether or not to consent to the sale. There must be reasonable grounds for the BHC not to consent to the sale of a BHC property. For example, consent would be withheld if it is known that the purchaser would not be using the property as their principle residence; if the purchaser is not a resident of the Town of Banff and does not meet Parks Canada’s eligible resident requirements; or if the purchaser of the BHC unit was a business.
2. Whether or not to exercise their Right of First Refusal(ROFR) by matching the offer and acquiring 100% of the property for the BHC
3. Whether or not to continue the equity share arrangement with the new buyer. This decision is at the Board’s sole discretion, but is guided by an appraisal based process.

The Board has 15 days to make these decisions.

A sale can be completed only if the Board consents and if it decides not to exercise its ROFR. The equity share arrangement may or may not be extended to the new buyer. (See Article 8 of the sub-lease) BHC sub-lease

16. What is Right of First Refusal (ROFR)?

The ROFR is a contractual right of the BHC to agree to, or refuse the purchase of a BHC property as per the terms and conditions of the sublease.

The BHC has a ROFR on all bona fide offers to purchase specific to a BHC property. It is at the sole discretion of the BHC to exercise this ROFR and re-acquire a BHC property per the terms and conditions of any bona fide offer presented to the BHC for consideration of consent and deferral of the BHC’s equity share in the transaction.

17. How can I see the sublease agreement?

Please see the attached link to the sublease agreement. The BHC strongly recommends that the sublease agreement be reviewed with a lawyer at all times. BHC sub-lease

18. How do BHC properties sell?

Existing BHC homeowners can sell their property in two different ways:

1. They can sell through the BHC’s Registered Resale List (RRL). For equity share properties the BHC charges a fee of 0.6% of market value for this service of which $500+GST is due upfront and is non-refundable. For price restricted properties the BHC charges a $2193+GST (2013) fee for this service of which $500+GST is due upfront and is non-refundable
2. They can sell through a real estate agent or privately, requesting from the BHC approval to purchase the equity share portion, prior to the actual home sale. (Each homeowner is then responsible for the full real estate fee and in every instance where this has occurred the Board requested that the purchaser pay 100% of the sale price of the property).

In all two scenarios, once an offer to purchase has been signed for a BHC property the BHC Board must be provided with a copy of the signed offer and then has fifteen (15) days from receipt of the offer to make the three decisions described above.

19. How do I get my name on the Registered Resale List (RRL)?

Applications for the RRL are free to pick up at the Banff Housing Corporation office, located in the Ti’nu building at 547 Coyote Lane, suite 2006 Monday to Friday (excluding holidays) from 8:30 a.m.-4:30 p.m. or can be printed from Banff.ca. In order to submit a completed application, applicants must return pg 5, 6 and 7 along with a one-time non-refundable fee of $50 to 547 Coyote Lane in Banff. Applicants will be required to re-confirm their willingness to be on the RRL as well as pay an annual $50 renewal fee.

Registered Resale List Application (PDF)

20. Is the RRL a first-come first-served arrangement or is it a prioritized list?

The RRL is a prioritized list and applicants receive points based on criteria, as identified in the application.

21. What are these criteria and how are points allocated to RRL applicants?

In brief:
o Two points or part thereof are awarded for every full year an applicant lived in Banff;
o One point or part thereof is awarded for every full year an applicant lived in the Bow Valley;
o Ten points is awarded for each dependent child or dependent adult who lives with the applicant on a full-time basis;
o Five points is awarded for each dependent child or dependent adult who lives with the applicant on a part-time basis;
o Single parents can receive additional points for dependent children if they can demonstrate that they have sole custody of the dependent(s);
o Ten points will be awarded per application where all listed applicants do not own (personally, jointly, indirectly or through business assets) any dwelling anywhere
o As of July 1 2013 the maximum amount of points any one applicant can receive for residency in Banff and/or the Bow Valley will be twenty as per the BHC Shareholder motion BHCS12-5

22. What is the process of sale for equity share properties through the Registered Resale List?

If an existing owner wishes to sell their property through the BHC’s RRL process, the following applies:
• The homeowner will contact the BHC and inquire as to what the process of sale through the Registered Resale List (RRL) entails;
• The BHC will discuss the process verbally with the homeowner and then forward to the homeowner a letter which must be returned along with a non-refundable $525 deposit ($500+GST) before the process of resale through the RRL will begin. The fee for selling an equity share property through the RRL is currently 0.6% of the market value of the property as identified in the offer to purchase, the non- refundable $525 amount will be deducted from the fee due (paid for by the vendor);
• Once the BHC receives the letter and non-refundable cheque for $525, the RRL is frozen. Applicants who put their name on the RRL after the RRL is frozen must wait until the frozen RRL is exhausted before any opportunity to view or discuss the acquisition of that particular property can occur, regardless of the number of points they have. (For properties that are listed for sale after the applicant putting their name on the RRL, the applicant will have their place on the list and be part of the sale process in point order);
• The BHC and the homeowner work through an appraisal-based process to determine the base market value of the home. This process is described below.
• Once the BHC receives the letter and non-refundable cheque for $525 from the homeowner, the BHC will work with the homeowner to establish a date and time for the first house showing. The homeowner has the final say on the date and time of the showing, however showings are usually in the evening and can held any day except Friday, Saturday or holidays;
• The BHC will produce a specification sheet for the property and forward it to the homeowner for final editing and approval. This spec sheet will be provided to all those who attend the showing;
• The BHC has group showings and will usually invite anywhere from thirty to forty (30-40) applicants to a particular showing (subject to discussion with the homeowner, if they want fewer invitees at any given showing then this will be accommodated). Calls for the showings will go out at least two days before the date of showing;
• On the evening of the showing, the BHC will be present to show the property. If the homeowner chooses to show the property themselves that is fine, however a BHC representative will still be at the showing to greet and take note of the RRL applicants who attend;
• If an applicant who is invited cannot attend a showing and advises the BHC before the date of the showing, the BHC will arrange for an alternative time for the applicant to view the property;
• If an applicant who is invited to the showing does not confirm their attendance for the showing and/or does not attend the showing, the BHC deems that the applicant is not interested in the property and that they have passed on the opportunity;
• Following the showing, the BHC will work with those who attend (in point order) and afford them an exclusive opportunity to discuss the acquisition of the property with the homeowner;
• When an applicant’s opportunity to speak with the homeowner presents itself, there is a 48-hour window for an applicant to discuss the acquisition of the property with the homeowner (Note: the 48 hrs does not include weekends or holidays, however, the BHC encourages both parties to discuss the acquisition through the weekend/holiday if possible). During the 48 hrs, the BHC is simply waiting to see if the parties can agree verbally to price and conditions. If both parties agree to such (verbally), this freezes the process and the potential purchaser will then go to their lawyer to draft up an offer to purchase, which they then sign and forward to the homeowner’s lawyer for review and the homeowner’s signature. Once both parties sign off on the offer, the offer is forwarded to the BHC;
• If at the end of the 48 hrs the parties have not come to an agreement on price and conditions but they wish to keep speaking and the homeowner is agreeable to this, the conversations will continue until such time that the homeowner advises the BHC that they have come to an agreement or that they cannot come to an agreement and the BHC should move forward to the next applicant. The 48 hr window of time exists only to keep the process moving forward, if a homeowner wishes to have more than 48 hrs to discuss the acquisition of their property with any RRL applicant it is to the discretion of the homeowner to do so;
• If an applicant who attends a showing passes on their opportunity to speak with the homeowner or cannot come to an agreement with the homeowner on price and conditions within their window of time (48 hrs) or any such time that the homeowner has allowed, the BHC will continue on through the list of attendees of the showing (in point order) in the same manner as identified above until such time that an agreement has been reached or that we have exhausted the list of those who have attended;
• If the BHC exhausts the list of those who have attended a particular showing with no offers being accepted by the homeowner, the BHC will then arrange with the homeowner a subsequent showing where the next group of applicants will be invited;
• This process will continue until either the homeowner accepts an offer or the BHC exhausts the existing RRL and any new applicants who have come on the RRL since the property first began showing;
• If at any time in the process an applicant makes an offer on a property and the homeowner is unable to accept the applicant’s best offer and requests that the BHC proceed with the process, the BHC will ask the applicant what their offer price was. If as the process moves forward the homeowner accepts an amount at or below any previous offer price, the BHC will return to the applicant who had made an offer at or above the existing offer price and inquire as to whether they continue to want the property at their previous offer price. If the answer is yes the BHC has the right to exercise its Right of First Refusal (ROFR) and re-acquire the property at the current offer price and then sell it (at a different amount) to the applicant whose offer had previously been declined.
• If the BHC both exhausts the existing RRL and all new applicants to the RRL from the time the property first went for sale without the homeowner accepting an offer for their property, the BHC will go through the list of RRL applicants a second time, after which time the non-refundable fee ($500+GST) is forfeited and the homeowner must provide a new letter indicating they wish to sell the property and provide a new $500+GST non-refundable deposit as part of a new $2500+GST fee.
• If the property is to be shown through the RRL a second time the homeowner will adjust their initial asking price
• If a homeowner of an equity share unit presents an offer to purchase for their unit that has come through the RRL process, per their sublease agreement, once the BHC receives a signed copy of said offer the BHC will have fifteen (15) days to review the offer and make the two key decisions described above.

23. What is the process of sale for price restricted properties through the Registered Resale List?

If an existing owner of a price-restricted property wishes to sell their property through the BHC’s RRL process the following applies:
• The homeowner will contact the BHC and inquire as to what the process of sale through the Registered Resale List (RRL) entails;
• The BHC will discuss the process verbally with the homeowner and then forward to the homeowner a letter which must be returned along with a non-refundable $525 deposit ($500+GST) before the process of resale through the RRL will begin. The fee for selling a price-restricted property through the RRL is currently $2193+GST, the non- refundable $525 amount will be deducted from the fee due (paid for by the vendor);
• The homeowner is not required to procure an appraisal as part of the sale process through the RRL however it is recommended that they do so to help guide their asking price;
• The BHC will provide the homeowner with information specific to the maximum resale price of their property based on projected closing dates. The actual maximum resale price can only be determined once the closing date of the transaction has been set;
• Once the BHC receives the letter and non-refundable cheque for $525, the RRL is frozen. Applicants who put their name on the RRL after the RRL is frozen must wait until the frozen RRL is exhausted before any opportunity to view or discuss the acquisition of that particular property can occur, regardless of the number of points they have. (For properties that are listed for sale after the applicant putting their name on the RRL, the applicant will have their place on the list and be part of the sale process in point order);
• Once the BHC receives the letter and non-refundable cheque for $525 from the homeowner, the BHC will work with the homeowner to establish a date and time for the first house showing. The homeowner has the final say on the date and time of the showing, however showings are usually in the evening and can held any day except Friday, Saturday or holidays;
• The BHC will produce a specification sheet for the property and forward it to the homeowner for final editing and approval. This spec sheet will be provided to all those who attend the showing;
• The BHC has group showings and will usually invite anywhere from thirty to forty (30-40) applicants to a particular showing (subject to discussion with the homeowner, if they want fewer invitees at any given showing then this will be accommodated). Calls for the showings will go out at least two days before the date of showing;
• On the evening of the showing, the BHC will be present to show the property. If the homeowner chooses to show the property themselves that is fine, however a BHC representative will still be at the showing to greet and take note of the RRL applicants who attend;
• If an applicant who is invited cannot attend a showing and advises the BHC before the date of the showing, the BHC will arrange for an alternative time for the applicant to view the property;
• If an applicant who is invited to the showing does not confirm their attendance for the showing and/or does not attend the showing, the BHC deems that the applicant is not interested in the property and that they have passed on the opportunity;
• Following the showing, the BHC will work with those who attend (in point order) and afford them an exclusive opportunity to discuss the acquisition of the property with the homeowner;
• When an applicant’s opportunity to speak with the homeowner presents itself, there is a 48-hour window for an applicant to discuss the acquisition of the property with the homeowner (Note: the 48 hrs does not include weekends or holidays, however, the BHC encourages both parties to discuss the acquisition through the weekend/holiday if possible). During the 48 hrs, the BHC is simply waiting to see if the parties can agree verbally to price and conditions. If both parties agree to such (verbally), this freezes the process and the potential purchaser will then go to their lawyer to draft up an offer to purchase, which they then sign and forward to the homeowner’s lawyer for review and the homeowner’s signature. Once both parties sign off on the offer, the offer is forwarded to the BHC;
• If at the end of the 48 hrs the parties have not come to an agreement on price and conditions but they wish to keep speaking and the homeowner is agreeable to this, the conversations will continue until such time that the homeowner advises the BHC that they have come to an agreement or that they cannot come to an agreement and the BHC should move forward to the next applicant. The 48 hr window of time exists only to keep the process moving forward, if a homeowner wishes to have more than 48 hrs to discuss the acquisition of their property with any RRL applicant it is to the discretion of the homeowner to do so;
• If an applicant who attends a showing passes on their opportunity to speak with the homeowner or cannot come to an agreement with the homeowner on price and conditions within their window of time (48 hrs) or any such time that the homeowner has allowed, the BHC will continue on through the list of attendees of the showing (in point order) in the same manner as identified above until such time that an agreement has been reached or that we have exhausted the list of those who have attended;
• If the BHC exhausts the list of those who have attended a particular showing with no offers being accepted by the homeowner, the BHC will then arrange with the homeowner a subsequent showing where the next group of applicants will be invited;
• This process will continue until either the homeowner accepts an offer or the BHC exhausts the existing RRL and any new applicants who have come on the RRL since the property first began showing;
• If at any time in the process an applicant makes an offer on a property and the homeowner is unable to accept the applicant’s best offer and requests that the BHC proceed with the process, the BHC will ask the applicant what their offer price was. If as the process moves forward the homeowner accepts an amount at or below any previous offer price, the BHC will return to the applicant who had made an offer at or above the existing offer price and inquire as to whether they continue to want the property at their previous offer price. If the answer is yes the BHC has the right to exercise its Right of First Refusal (ROFR) and re-acquire the property at the current offer price and then sell it (at a different amount) to the applicant whose offer had previously been declined.
• If the BHC both exhausts the existing RRL and all new applicants to the RRL from the time the property first went for sale without the homeowner accepting an offer for their property, the BHC will go through the list of RRL applicants a second time, after which time the non-refundable fee ($500+GST) is forfeited and the homeowner must provide a new letter indicating they wish to sell the property and provide a new $500+GST non-refundable deposit as part of a new $2150+GST fee.
• If the property is to be shown through the RRL a second time the homeowner will adjust their initial asking price
• If a homeowner of an price-restricted unit presents an offer to purchase for their unit that has come through the RRL process, per their sublease agreement, once the BHC receives a signed copy of said offer the BHC will have fifteen (15) days to review the offer and make the two key decisions described above.

24. What criteria does the BHC look at when deciding whether or not to defer payment of the BHC’s equity share when an offer to purchase is presented to the Board for consideration?

Specific to the equity-share properties, there is a process that both the BHC and the homeowner undertake that helps determine when the BHC will defer payment of its equity share when an offer is presented for consideration. In order for the BHC to sign off on a sale, the following criteria must be met:

1. Identification of Home Sale
The Banff Housing Corporation and the Homeowner make a binding agreement regarding the “Base Market Value” of the home.
a) The Homeowner notifies the Banff Housing Corporation that he/she intends to sell.
b) The Homeowner and the Banff Housing Corporation each procure an appraisal from a list of approved appraisers at their own expense, and simultaneously provide the appraisal to the other party. All appraisals should have at least one non-Banff Housing Corporation home as a comparable.
c) The average of the two appraisals will be accepted as the “Base Market Value” valid for a period of 3 months.
d) If the appraisals differ by more than 8%, there will be a 48 hour review period while the homeowner and the Banff Housing Corporation discuss and decide whether either party wishes to obtain a 3rd appraisal. Should either party obtain a third appraisal (at their own cost, unless both parties deem it necessary in which case the costs will be shared equally) the “Base Market Value” is the average of the 3 appraisals.
e) Appraisals are kept confidential by all parties except as noted above, unless agreed to by both parties.

NOTE: The percentage difference between appraisals is calculated by: (Highest-Lowest) over Highest x 100

Step 2: Setting of the “Bookends” of the pricing range
The upper limit of the “Range” is 6% above the Base Market Value or 3% above the highest appraisal, whichever is lower.

The lower limit of the “Range” is 6% below the Base Market Value or 3% below the lower appraisal, whichever is higher. This lower limit is not a price guarantee of any sort.

Step 3: Clear Outcomes
If a qualified Third Party Purchaser makes an offer for a sale value within the Range, the Banff Housing Corporation will consent to the transaction and will not refuse to defer its equity on the basis of the price.

If a qualified Third Party Purchaser makes an offer for a sale value above the Range, the Banff Housing Corporation may refuse consent to the transaction and refuse deferral of its equity on the basis of the price.

The above process applies specifically to consent based on price. However, equity deferral can also be refused based on public policy. The choice to refuse equity deferral based on public policy can only be made for previously established and published public policy reasons.

25. What happens if I’m on the RRL and invited to a BHC showing, but I’m not interested in attending?

You simply advise the BHC that you will not be attending. There is no penalty for passing on an opportunity, so you remain on the RRL and continue to accumulate residency points as time passes.

26. What happens if I attend a showing through the RRL for a BHC property but I’m not interested in making an offer?

When the BHC contacts you to advise that your opportunity to discuss the acquisition of the property with the homeowner has arrived, simply advise the BHC that you would like to pass on this opportunity at this time. There is no penalty for passing on an opportunity, so you remain on the RRL and continue to accumulate residency points as time passes.

27. If I want to buy a BHC property, can I own other property at the same time?

Yes. There is nothing in the BHC’s sublease or policies that preclude an individual(s) from owning other property at the same time as they own their BHC property. However the BHC property must be owner- occupied and must be your primary residence. The definition of "Primary Residence" in the sublease agreement indicates that the residence “is the place that the Sub-Lessee ordinarily and continually occupies as his residence on a full time basis, as determined by the Corporation." The BHC Board (Board) determines full time basis to be day to day.

28. If I buy a BHC home can I stay on the RRL?

Yes. However an applicant cannot benefit from their points twice therefore the points you have used to acquire the current BHC home (residency, dependents, not owning property etc.) will be eliminated and you will only generate residency points (or dependent points if the child was born after possession of the current home) from the time of possession of the current BHC home.

29. If I were to acquire a BHC property, can I rent the BHC property if I choose to be away from Banff for any period of time?

You can rent your property only if you have first received written approval from the BHC’s Board of Directors. A copy of the BHC’s rental policy is available on the BHC’s website. To date, the BHC has granted rental requests to sub-lessees only for educational and/or work related reasons and such approvals are generally one year long. After that time, the sub-lessee must decide whether they wish to return to Banff and continuously occupy the premises on a full time basis or move forward with their new opportunity (ies). BHC Rental Policy

30. So what if I retire while I own the BHC property and want to travel or spend a period of time outside of Banff?

The sublease agreement does allow that BHC properties may remain vacant for a maximum period of SIX (6) consecutive months in any TWELVE (12) month period, or a longer time if the Board authorizes that in writing. To date the BHC has not approved a property to be vacant for more than six consecutive months in any twelve-month period.

31. If I want to purchase a BHC property, how much do I have to have as a down payment?

The amount of down payment that you will require will be determined by your lender. Historically speaking, lenders seem to be requiring ten percent (10%) of the price to the buyer as a down payment, although only your lender can confirm whether that is their current practice or not . For example, if the BHC consented to the sale of a BHC property and the sale price of the property was $600,000 and the homeowner had an 80% equity share in the property ($480,000), if the lender did require the purchaser to have ten percent (10%) down payment that would mean a down payment of $48,000 (10% of (600,000x80%)).

UPDATE 2018 stress test: As of the 1st of January 2018, all Canadian buyers borrowing from a federally regulated lenders will be subject to the OSFI Mortgage Stress Test, including insured borrowers (those with a down payments of 20% or more.)
Lenders will now have to qualify all conventional mortgages using the Bank of Canada’s 5-year benchmark rate, which is currently set at 4.99%, or at the current contracted rate + 2% if that rate exceeds the benchmark rate. So, if you are currently pre-approved at 3.5%, you will now have to qualify as if your interest rate were 5.5%, which could significantly reduce your buying power.

32. What is a mortgage stress test, and how is it calculated?

In finance, “stress tests” are ways of considering the worst-case scenario for any investment. When it comes to mortgages, stress tests determine the risks of each loan application. How much can the borrower afford given their current debt-to-income ratio, and would they still be able to make the monthly mortgage payments should the rates increase? How would their payments be affected in the case of a temporary job loss? These are all important factors in determining how likely a borrower is to default on their loan payments.
As of January 2018, home buyers will need to qualify not only for the rate negotiated as part of their mortgage contract, but also at their current rate + 2%, or the average bank 5 year posted rate of 4.89% (whichever is higher).
By “stressing” the mortgage this way, banks will ensure that the borrower would be able to service their loan under pressure, should the interest rates climb higher than the current average.
Additionally, borrowers should not exceed a 44% Total Debt Ratio (TDS), and will be required to spend less than 32% of their income on housing costs such as utilities, mortgage payments, and real estate taxes.

33. If my down payment is less than 20% of the sale price of the property, don’t I have to pay mortgage insurance?

Yes, the law states that if your down payment is less than 20% of the sale price, you must have mortgage insurance. However, with the BHC’s properties, the BHC equity percentage in the transaction added to the amount that your lender will require as a down payment from you exceeds twenty percent of the sale price of the property. Therefore, you will not have to pay a mortgage insurance premium if you acquire a BHC property. In lieu of mortgage insurance, the BHC will provide lenders a subordination agreement specific to the initial mortgage that a purchaser has on the subject property. The subordination agreement provides the lender with the type of security that mortgage insurance would. At present, Alberta Treasury Branches, Bow Valley Credit Union, CIBC and BMO recognize the subordination agreement. The BHC provides a subordination agreement only for the initial financial charge when the homeowner first acquires the property. The BHC will not provide a subordination agreement to subsequent financial charges registered on title.