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New Mortgage Rules Take Effect
December 18, 2024 | Posted by: Jamie Small - Ottawa Mortgage Broker
Two significant changes to mortgage rules were implemented this week, designed to ease the financial barriers to homeownership, especially for first-time buyers. Here’s what you need to know—and how these changes could work in your favour.
1. 30-Year Amortization for First-Time Homebuyers
Good news for first-timers—if you’re purchasing a home with less than a 20% down payment, you can now amortize your mortgage over 30 years instead of the previous 25-year limit. Why is this a big deal? It gives you access to lower monthly mortgage payments, making it easier to budget and qualify for a larger mortgage amount.
2. Insured Mortgages Cap Increased to $1.5M
The price of homes has changed drastically over the years, and now, the rules are catching up. With the update, you can buy a home worth up to $1.5 million with an insured mortgage (previously capped at $1 million).
This means homebuyers with a down payment of less than 20% can now access homes in a wider price range. For example, a $1.5M home would now require a minimum down payment of $125,000, instead of $300,000. That’s a game-changer for many Canadians looking to buy in markets where prices have steadily climbed.
How These Changes Improve Affordability
Both of these updates are designed to put homeownership within reach for more Canadians. By lowering monthly payments and increasing the home price cap for insured mortgages, these changes are making it easier for prospective buyers to step into the market—whether it’s a cozy city condo or a family home in the suburbs.
Additional Initiatives to Support Buyers
The revised mortgage rules are part of a larger, ambitious effort to make housing more accessible. Other initiatives include:
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Tax-Free First Home Savings Account: Save up to $40,000 tax-free for your first home ($8,000 annually).
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Enhanced Home Buyers’ Plan: Withdraw up to $60,000 from your RRSP to use toward your down payment—an increase from the previous $35,000 limit.
These are just a few of the steps the government is taking to reduce financial barriers for buyers across the country.
A Holistic Approach to Housing Reform
Beyond mortgage changes, the federal government is also introducing stronger protections for renters and buyers. The blueprints for a Renters’ Bill of Rights and a Home Buyers’ Bill of Rights aim to create a fairer playing field by addressing issues like renovictions, blind bidding, and lease standardization.
Provinces and territories are being encouraged to leverage $5 billion in federal funding through the Canada Housing Infrastructure Fund to implement practices that protect homebuyers and renters nationwide.
The Bigger Picture
These reforms show a clear commitment to making homeownership more attainable while addressing broader issues in the housing market. By easing financial entry points for buyers and incentivizing the construction of new builds, Canada is moving closer to fulfilling the promise of a more accessible and affordable housing market.
If you’re a potential homebuyer, now’s the time to explore your options and see if these changes could work in your favour. Whether you’re putting away savings in a government-boosted home savings account or benefiting from the new 30-year amortization, every measure counts in making your dream of homeownership a reality.
Interested in learning more about how these changes could impact your home-buying plans? Feel free to contact us for insight and guidance.
For more information contact me, Jamie Small your Ottawa, Ontario Mortgage Broker today!