Ottawa to extend 30-year amortizations, raise ceiling on insured mortgages – National
The Liberal government announced proposed changes to the Canada Labour Code on Monday. mortgage market, expanding the availability of 30-year bonds depreciation and increase the ceiling on insured mortgage products.
First-time buyers, as well as those purchasing new homes, will soon be able to take out insurance mortgages with a 30-year depreciation period, compared to a typical 25-year payback period.
In addition, the Liberals are increasing the price ceiling for taking out insured mortgages to $1.5 million, compared to the previous limit of $1 million.
Both proposed changes would take effect on December 15.
Deputy Prime Minister and Finance Minister Chrystia Freeland made the announcements Monday in Ottawa, where MPs are meeting for the start of the fall session of the House of Commons.
She presented the changes as a way to help Canadians afford their first home.
Extending amortizations helps reduce the monthly burden of a mortgage, although the homeowner is likely to pay more interest over the life of the loan.
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Given that households must make a down payment of more than 20% up front when purchasing a home with an uninsured mortgage, the current price cap on insured mortgages creates a significant barrier for Canadians looking to purchase a property worth more than $1 million.
In some of Canada’s most expensive real estate markets, the average home price is already above that mark, making it difficult for some potential buyers to save enough to become homeowners.
Under the proposed changes, an individual could put down between 5 and 20 per cent of the value of a home worth up to $1.5 million, reducing the amount of down payment required.
The proposals come after those of the liberals introduced new changes as of August 1 to allow 30-year amortizations for first-time home buyers who take out insured mortgages on new construction.
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