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Big news today in the world of Canadian mortgages, with three BIG changes intended to help our housing crisis.
#1: Help for First-time Buyers
As of December 15, 2024, insured first-time home buyers (in other words, with downpayments of less than 20%) will be able to amortize their mortgage payments over 30 years (instead of 25 years). By spreading repayment back over a longer period of time, borrowers benefit from lower monthly payments – and may be able to borrow more than they could previously.
For example: A first-time buyer buys a property for $800,000 with a 10% downpayment. At a 4-year fixed interest rate of 4.09%, the mortgage payment decreases by $362 monthly, when amortized over 30 years instead of 25, from $3,822 to $3,460.
If you aren’t a first-time buyer, you can still amortize your payments over 30 years IF you have a downpayment that’s 20% or more of the purchase price.
Related: Click to read about ALL the Incentives for First-Time Buyers
#2: Help for Buyers with Down Payments of Less Than 20%
In Canada, homebuyers with down payments of less than 20% need to get mortgage insurance (for example, through CMHC). Before today’s announcement, the only properties that were eligible for the mandatory insurance were those priced under $1 million – which seriously restricted the properties that could be purchased in a city like Toronto.
As of December 15th, 2024, would-be homeowners will be able to qualify for mortgage insurance for properties priced up to $1.5 million. This is HUGE news for the Toronto real estate market!
#3: Help for Buyers of Newly-Built Homes
Earlier this year, the government announced that first-time buyers of new condos and houses (‘new builds’) would be able to stretch their payments over 30 years instead of 25 years. Today’s announcement expands the longer amortization to ALL buyers of new builds, effective December 15, 2024. While this will certainly help buyers looking to buy pre-construction condos and houses, the real goal here is to help the struggling pre-construction industry and encourage builders to keep building much-needed homes.
Today’s announcements are good news for buyers and sellers, and along with the recent interest rate decreases, signal another step forward towards recovery.
