One of Canada’s new federal mortgage rules is coming into effect Sunday, and another starts next month. A broker says this is what would-be buyers need to know.
First-time homebuyers will benefit the most from one of the biggest rule changes that will extend amortization from a limit of 25 years to 30 years on new construction and resale homes, according to Mary Sialtsis.
“So this can really help buyers get into the market because if you spread the payment out over a 30-year amortization it’ll make it a lower monthly payment, but for those who need it, it will actually increase their buying budget and that may help somebody get into their first homes,” Sialtsis told CTV Your Morning in an interview Friday.
This change comes into effect on Sunday.
Secondary suites refinancing is another major change, she added. As of Jan. 15, the government will allow people to refinance their homes for up to $2 million so they can get the funds required to build an additional dwelling unit on the same property.
The eligibility for this measure is restricted, she said. The change applies only to those who already own their home, allowing them to tap into existing equity to borrow money, she said. Other requirements are included in a news release from the federal government issued in October.
Sialtsis said the changes open doors to more homebuyers, whom she advises to speak to mortgage professionals for a better idea of their financial situation.
“First and foremost, check your numbers,” she said. “This move from 25- to 30-year amortization may make the difference between staying in a rental and owning.”
While the changes may help more Canadians qualify for mortgages, some of the measures mean they’ll end up paying significantly more over time.
And the latest data available on home ownership in Canada suggests even with new measures, it’s still a distant dream for many, especially in major cities. Data released last month suggests the salary needed to buy a home is decreasing, but in many cities is still well over $100,000.
Watch the video above to see the full interview.