If you’ve been dreaming about buying your first home or purchasing a newly built property, there’s some fantastic news on the horizon. Starting December 15, two major changes are coming to the world of insured mortgages in Canada—changes that could make homeownership more attainable for young buyers.
Let’s break down what’s coming and how it can help you.
1 – Extended 30-year Amortizations for all First-Time Buyers and New Builds
Previously, insured mortgages were capped at a 25-year amortization, although first-time buyers had access if they purchased a newly constructed home. But starting December 15, all first-time homebuyers, whether purchasing a new build or not, and anyone buying newly constructed homes (does not apply to investors) will have the option of extending their amortization to 30 years. What does this mean for you?
In simple terms, this longer amortization allows you to stretch your mortgage payments over a longer period. This results in lower monthly payments, offering more breathing room in your budget.
For example, for a $600,000 mortgage, a 25-year amortization has payments of $3,301 while 30 years is $3,004 for a 5-year fixed mortgage. If you went variable with adjustable payments, 25 years is $3,593 and 30 years is $3,310. The benefit of an adjustable mortgage is that your payment will drop with each drop in the Bank of Canada rate and your lender’s prime rate. With more rate cuts predicted for 2024 and 2025, this is a solid option for many homebuyers.
Falling rates and easier payments for first-time buyers are expected to ramp up the housing market, so if you’ve been on the sidelines waiting, now is the time to get your mortgage preapproval so you know your budget and can act on opportunities. We won’t be in a buyers’ market for too much longer.
For many first-time buyers, this is a game changer—it can mean the difference between renting and finally stepping into homeownership and building equity for the future.
2 – The Insured Mortgage Cap Jumps from $1M to $1.5M
In addition to the extended amortizations, the insured mortgage cap is also increasing—from $1 million to $1.5 million. This boost is a response to Canada’s rising housing prices, especially in major cities where the cost of entry can feel overwhelming. With this higher cap, buyers with less than 20% downpayment will have more ability to access homes in competitive and rapidly growing cities like Brampton and throughout the GTA.
Assuming downpayment rules don’t change, buying a $1.5 million home will require a down payment of just $125,000, based on the current requirement for insured mortgages of 5% for the first $500,000 and 10% for the remainder of the purchase price. This is a significant reduction from the 20% down or $300,000 that previously was necessary because uninsured mortgages require a downpayment of 20%. Insured mortgages at $1M to $1.5M will also qualify for switching without going through the stress test at renewal.
Overall, the door to homeownership opens wider, especially in high-demand areas, giving young Canadians a greater chance to invest in property.
What These Changes Mean for You
For many Canadians, particularly young first-time homebuyers, these changes are a golden opportunity. The combination of lower monthly payments through extended amortizations and access to higher-priced homes thanks to the new insured mortgage cap makes purchasing a home more feasible. You’ll have greater flexibility to choose a home that suits your needs while keeping your payments manageable.
With housing affordability being a significant barrier in Brampton and the GTA, these new measures aim to reduce that burden and make the dream of homeownership a reality for more people.
Why You Should Act Now
While these new tools are set to make home-buying more accessible, they could also trigger an increase in market activity once they take effect. Savvy buyers who get in early may have an advantage, as the market could heat up quickly. If you want to buy your first home or invest in a new build, now is the time to start preparing. Get pre-approved, understand your budget, and be ready to act once these changes go live. Or if you don’t need these measures to enter the market, you may want to do so now, before these changes ramp up prices.
New Rules Means it’s Time to Get the Best Advice
As we approach these significant changes to mortgage amortizations and the insured mortgage limit, navigate them with expert guidance. Rakhi Madan, Brampton’s top mortgage broker, is here to help you understand how these new opportunities can work for you. With her extensive experience, trusted reputation, and caring approach, Rakhi will explain how to leverage these changes effectively. Her insights will be invaluable as these new rules could impact the entire market, potentially driving it upwards. Rakhi Madan is the professional you want by your side for reliable, efficient, and insightful mortgage solutions.
Whether you’re a young Canadian dreaming of your first home or looking to move into a new build, these changes will give you the financial flexibility and access you need to realize your homeownership goals. Keep your eyes on December 15—it could be the start of your journey toward owning your dream home.
Are you ready for this golden opportunity? Reach out today to explore how these changes could work for you!
