Government Expands Eligibility for 30 Year Amortizations

Date Posted: September 25, 2024

 

 

 

 

Owning a home is a goal for many Canadians, but rising mortgage costs have made this dream increasingly difficult, particularly for Millennials and Gen Z. To assist younger generations in achieving homeownership, significant changes to mortgage rules took effect on August 1, 2024. These updates introduce 30-year insured mortgage amortizations specifically for first-time homebuyers purchasing new construction.

However, on September 16th, 2024 the Government of Canada announced even more changes to amplify the effect of the new rules announced in August. The focus of this article will be on the new expanded eligibility for 30 year amortizations.

 

The Government's outline of the changes to 30 year amortizations is as follows:

Expanding eligibility for 30 year mortgage amortizations to all first-time homebuyers and to all buyers of new builds, effective December 15, 2024, to reduce the cost of monthly mortgage payments and help more Canadians buy a home. By helping Canadians buy new builds, including condos, the government is announcing yet another measure to incentivize more new housing construction and tackle the housing shortage. This builds on the Budget 2024 commitment, which came into effect on August 1, 2024, permitting 30 year mortgage amortizations for first-time homebuyers purchasing new builds, including condos.

 

What does this mean?

Amortizations

The amortization period is the time it takes to pay your mortgage. If your mortgage has a 25 year amortization period, the monthly payments you make will be calculated to pay off your mortgage in 25 years. However, if it has a 30 year amortization period, the time it takes is longer which means each monthly payment will be less.

This means that a longer amortization period will allow for homeowners to manage monthly payments easier, and allow for easier qualification to purchase that home.

 

Who is eligible for what?

30 Year Amortization on Resale Home (Not a new build or new construction)

All first-time buyers are eligible for a 30 year amortization on any home they purchase.

30 Year Amortization on New Build

All buyers including first-time buyers and buyers who have previously purchased a home, will be eligible for 30 year amortizations on new builds. This incentive is to help drive Canadians towards purchasing a new build, and incentivize construction companies to push ahead in building more new homes.

 

As house prices remain high and qualification for first time buyers remain difficult, adjusting the eligibility for longer amortization periods allows for more access to the housing market for first time buyers. Although these changes have just been announced and are not currently in effect, the news has been encouraging for many of those sitting on the sidelines waiting for their time.

 

The changes announced are to be effective as of December 15th 2024. Have any questions? Contact your broker.