The new upcoming mortgage rules
Several significant changes to the Canadian mortgage industry are set to take effect from now until the end of 2024. Here are the key updates:
Higher Insured Mortgage Cap: Starting December 15, 2024, the insured mortgage cap will increase from $1 million to $1.5 million. This is aimed at making home ownership more accessible, especially in high-cost markets like Toronto and Vancouver. The new down payment requirements will be 5% on the first $500,000, 10% on the portion between $500,000 and $999,999, and 15-20% on the remaining portion up to $1.5 million.
30-Year Amortization for First-Time Home buyers: Also effective from December 15, 2024, first-time buyers, as well as buyers of newly constructed homes, will be eligible for 30-year amortizations. This allows for lower monthly payments compared to the standard 25-year term but will result in higher overall interest costs.
Switching Lenders Without Stress Test: New update: Beginning November 21, 2024, uninsured mortgage holders (those with a down payment of 20% or more) can switch lenders at renewal without needing to pass the stress test. This change applies to straight mortgage switches where the loan amount and amortization period remain unchanged. The adjustment aims to increase competition among lenders and offer borrowers better rates without the need to re qualify.
These reforms are part of the federal government's broader strategy to address housing affordability and are designed to help first-time buyers and others in high-demand markets like Ontario and British Columbia. However, they also come with long-term financial considerations, particularly regarding increased debt and interest payments.
