Key Changes
- Increased Cap for Insured Mortgages: The cap on insured mortgages will be raised from $1 million to $1.5 million. This adjustment reflects the current housing market realities and allows more Canadians to qualify for a mortgage with a down payment below 20%. For example, a purchaser buying a $1.2-million detached home in Vancouver could now make a down payment of $95,000, compared to $240,000 under the current rules.
- Expanded Eligibility for 30-Year Amortizations: Previously, 30-year amortizations were only available to first-time homebuyers purchasing new builds. Starting December 15, this option will be extended to first-time homebuyers buying new and resale homes and to anyone buying new construction homes. This change aims to reduce monthly mortgage payments, making homeownership more affordable. For example, a first-time homebuyer with a typical family income, facing a typical house price, who puts down the minimum mortgage payment could see their purchasing power increased by around 9 per cent.
- No Requalification for Mortgage Renewal: The new rules, effective on November 21, 2024, insured mortgage holders can switch lenders at renewal without undergoing another mortgage stress test. This measure is designed to increase competition among lenders and help homeowners secure better mortgage deals.
- Financing Rental Suites: Effective Jan. 15, 2025, homeowners be able to access up to 90 per cent of their home’s value through default-insured refinancing to build secondary suites. The aim is to increase the long-term rental supply in high-demand areas while helping homeowners manage rising mortgage costs.
Impact on Homebuyers
These changes are part of the federal government’s broader strategy to address the housing crisis and make homeownership more attainable. By increasing the insured mortgage cap and expanding amortization options, the government hopes to alleviate some of the financial burdens faced by potential homebuyers, especially younger generations.Encouraging New Housing Construction
In addition to making mortgages more affordable, these reforms are expected to incentivize the construction of new homes, including condos. This is crucial for tackling the housing shortage and ensuring that more Canadians have access to affordable housing options.Conclusion
The upcoming changes to Canadian mortgage rules reflect a commitment to making homeownership more accessible and affordable for Canadians. As these changes take effect, it will be interesting to see their impact on the housing market and whether they help more Canadians achieve their dream of owning a home.If you’re considering buying a home or are in the process of renewing your mortgage, it’s a good idea to discuss these changes with your lender to understand how they might benefit you.
