Insured mortgage cap hike a ‘game changer’ for some homebuyers
A barrier to entry in some of Canada’s most expensive housing markets just got lower thanks to new changes impacting the country’s mortgage landscape.
The ability to put less money down on an insured mortgage for a home worth more than $1 million will be a “game changer” for some buyers, real estate experts tell Global News.
But how much extra buying power Canadians get from a higher insured mortgage cap and wider availability of 30-year amortizations will vary from household to household and market to market, they warn.
The federal government’s previously announced changes aimed at making it easier for some Canadians to qualify for a mortgage will take effect on Sunday.
One such change will see all Canadians who are considered first-time homebuyers, as well as those buying new builds, able to take out an insured mortgage with an amortization period of 30 years, up from the typical 25 years.
Doing so lowers the bar to qualify for a mortgage and reduces the size of monthly payments, making the costs of carrying the home loan a bit more manageable, even as owners are likely to owe more over the lifetime of the mortgage.
The other major change is a hike to the price cap under which Canadians can take on insured mortgages, or mortgages with a high loan-to-value ratio. These mortgages allow Canadians to put less than 20 per cent down upfront on the purchase price of a home, reducing the savings barrier for buyers.
Under the new rules, Canadians can get an insured mortgage on anything priced at $1.5 million or lower, up from the previous cap of $1 million. That means that buyers will have an easier time saving for a home in some of Canada’s most expensive markets, such as Toronto and Vancouver, where property values routinely
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