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0 year amortization for first-time buyers’ mortgages on new homes has been announced by,The Honourable Chrystia Freeland Deputy Prime Minister and Minister of Finance
Currently, first time home buyers with a downpayment under 20% of the value of the home being purchased, has a maximum amortization period of 25 years; From August 1st, 2024 this new maximum amortization will be available up to 30 years, lowering amount needed in each mortgage payment. Lower mortgage payments increases improves affordability and qualification.
Scenario:
Currently: on a 25 years amortization mortgage of $700,000 at a rate of 4.89% the monthly mortgage payment is $4,027.51
Soon: on a 30 years amortization mortgage of $700,000 at a rate of 4.89% the monthly mortgage payment is $3,689.99
Difference: $337.52 lower.
Ms. Freeland also announced that the amount that first time homebuyers will be able to borrow towards the down payment from their RRSP’s account will be raised to $60,000 from the current $35,000, and the repayments to this borrowing will be able to be made starting after 5 years from the initial borrowing date, rather then 2 years which is the current. Note that this will take effect from April 16, 2024.
The first home savings account that a first time home buyer is encourage to open and that has been avaible since last year, has $8,000 depoist per year and up to $40,000 cap within a maximum savings time of 15 years, can also be used towards the downpayment
The above announcements definetaly help first time home buyers purchasing a new built home in terms of liquidity and qualifications, however it doesn’t help to lower the home prices according to the critics reacting to the announcements.
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