New Content: Lower Monthly Payment or Paying More Interest?
Introduction: sConsidering buying a home? Picking the right mortgage term is crucial. In Canada, the standard is a 25-year amortization, but 30-year terms are gaining popularity due to rising interest rates. Starting August 1, 2024, first-time home buyers can opt for 30-year terms for newly built home, Understand the new rules:
If you're not a first-time buyer, you can still get a 30-year mortgage with a 20% down payment or by choosing an uninsured mortgage. Unsure about term length? Think about whether you want lower monthly payments or are okay with paying more interest over time.
Advantages and Disadvantages of a 30-year Mortgage Term:
Pros: Lower monthly payments make homeownership more affordable, especially for younger buyers. Increased borrowing power.
Cons: Higher total interest payments over the mortgage's life.
Impact of the New Rule on the Canadian Housing Market:
This rule change could stimulate demand for newly built homes, potentially boosting construction activity. However, it may also artificially inflate prices if demand outpaces supply.
Eligibility Criteria for a 30-year Mortgage with Less than a 20% Down Payment:
Currently, a down payment higher than 20% is required for a 30-year mortgage. With the new rule, first-time homebuyers can choose this option even with less than 20% down, but it's limited to newly built homes.
Our Opinion: The government should extend this option to all homebuyers, regardless of property type. This would promote affordability and accessibility in the housing market.
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