In its latest announcement regarding mortgages for First Time Home Buyer, Federal government raised the insured mortgage cap to $1.5M for a down payment of 20%. Also, the amortization period has been increased from 25 to 30 years, bringing a sigh of relief on home buyers worried about huge monthly payment.
With the expected inflation levels lowering down constantly and bringing the percentage of just 2%, get ready for more amazing mortgage cuts to be introduced in coming months. If you are still planning to buy a home, nothing can be better than now. Start your home search today and wait for the base point rates to witness another deduction and this is all you need to get started with your mortgage application.
The federal government announced these changes to Canada’s mortgage system recently and marked them as one of the boldest reforms in decades. These changes are highly in favour of the first time home buyers and will play a significant role in reducing the financial burden.
Insured Mortgage Value Raised To $1.5 Million
Along with this, another key change introduced is lifting the insured mortgage value to $1.5 million compared to the current insured mortgage value of $1 million. The impact of this move will improve the Canadians’ access to high-priced housing markets, allowing them to buy a home of higher value. Since all first-time homebuyers will now have access to 30-year amortizations, this will greatly reduce the burden on them with a cut on the value of monthly payments.
In April, the government announced that 30-year amortization periods on insured mortgages will be limited to first-time homebuyers purchasing newly built homes.
These measures are the most significant mortgage reforms in decades and part of the federal government’s plan to build nearly 4 million new homes to help more Canadians become homeowners.
Based on the current average home price of $649,100 as of August, a 30-year amortization would provide approximately $300 per month in payment relief against a 25-year term based on current 5-year mortgage rates.
The changes will take effect in December 2024, with further details on the implementation and transition process to follow.
The measures come as major cities’ affordability and housing access are under increasing scrutiny. By boosting the insured mortgage ceiling and lengthening amortization durations, the government hopes to address the rising obstacles that first-time buyers and those looking to renovate their houses confront in more competitive markets.
The government also released its Blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights, stating that it is collaborating with provinces and territories to put in place measures that will protect Canadians from blind bidding, as well as standardize lease agreements and increase transparency by making sales price history available through title searches.
For more details on the latest mortgage changes, feel free to contact our mortgage brokers in Abbotsford.