Mortgage Blog
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Changes for Homebuyers: Higher Price Caps For Insured Mortgages & Lower Down Payments!
September 17, 2024 | Posted by: Simon Lyn
Big News for Home Buyers!
Exciting changes are coming for homebuyers in Canada! Starting December 15th, the government is raising the price cap for insured mortgages to $1.5 million—the first increase since 2012. This move is especially beneficial for those looking to buy in high-cost markets like Toronto and Vancouver, where housing prices often exceed the previous $1 million cap. But what does this mean for you?
- Lower down payments on higher-priced homes: Under the new rules, buyers can now qualify for insured mortgages with homes priced up to $1.5 million, up from the previous limit of $1 million. This means if you purchase a home for $1.5 million, you can still put down less than 20%, making homeownership more accessible in areas where home prices are steep. For example, on a $1.5M purchase, you’d only need to put down $125K (or 8.3%), which is a significant relief for buyers who don’t have large sums of money saved for a down payment.
- Extended amortizations for first-time buyers: Another key benefit is that first-time buyers can now opt for a 30-year amortization, up from the previous 25 years. This longer repayment period reduces monthly mortgage payments by about 9%. For instance, on a typical mortgage, this could translate into savings of around $200 a month. These extended amortization options can help first-time buyers manage their cash flow better, making homeownership more affordable.
- A boost for new construction: These changes may also give a boost to new construction, encouraging developers to start more housing projects. With more buyers able to qualify for mortgages on higher-priced homes, there’s an opportunity for more housing supply to enter the market. This could help ease some of the pressure in tight markets like Toronto and Vancouver.
What’s the downside?
While these changes offer more opportunities for buyers, there’s a concern that increasing the mortgage cap could further fuel demand in an already tight housing market, pushing prices even higher. The key to managing this demand will be ensuring enough new homes are built to meet buyer needs. More homebuilding is essential to keeping the market balanced.
This is a big shift, and it could have a major impact on your homebuying plans. Have questions about how this change might affect you? Email me anytime to discuss your options at simon@bmtgg.ca and see how you can take advantage of these new rules!
Stay tuned for more updates, and feel free to reach out!