30-Year Amortization for
Insured Mortgages on New Builds!

Big News for Homebuyers: 30-Year Amortization for Insured Mortgages on New Builds!

If you’ve been dreaming of owning a brand-new home, here’s an exciting update: Homebuyers of newly built properties can now secure a 30-year amortization on an insured mortgage. This change can make homeownership more accessible, with lower monthly payments and increased buying power. Let’s break it down:

What’s the Update?

Buyers of newly built homes can now opt for a 30-year amortization on an insured mortgage. This option is available to buyers with less than 20% down payment, who require mortgage insurance through providers like CMHC.

Why Is This Important?

  • Lower Monthly Payments: Spreading your payments over 30 years reduces your monthly costs, easing your budget.
  • Greater Buying Power: With smaller payments, you may qualify for a higher loan amount, giving you access to more home options.

How Does It Work?

Let’s compare a 25-year amortization to the new 30-year option for the same property:

Example: $600,000 Purchase Price

  • Down Payment: $35,000
    • 5% on the first $500,000 = $25,000
    • 10% on the remainder = $10,000
  • Mortgage Amount (before CMHC Fee): $570,000
  • CMHC Fee: $22,600 (added to the mortgage)
  • Total Mortgage Amount: $592,600
  • Interest Rate: 5% (example purposes)

Amortization Period

25 Years
30 Years

Monthly Payment

$3,417.52
$3,135.97

Savings: With a 30-year amortization, you save $281.55 per month, giving you more financial flexibility.

Who’s Eligible?

  • Buyers of newly constructed homes.
  • Borrowers with a down payment of less than 20%, requiring mortgage insurance.
  • Applicants who meet lender credit and income qualifications.

Additional Benefits of New Builds

  • Energy Efficiency: New builds often feature modern, energy-saving technologies, lowering utility costs.
  • Customization: Choose finishes and layouts tailored to your preferences.
  • Peace of Mind: New homes include warranties, protecting your investment.

Pros and Cons of a 30-Year Amortization:

Pros:

  • Lower Monthly Payments: Easier on your budget, with more room for other expenses.
  • Increased Buying Power: Qualify for a higher loan amount, expanding your options.
  • Flexibility: Use the savings for renovations, investments, or paying off higher-interest debt.

    • Cons:

    1. More Interest Paid Over Time: The longer the term, the more interest you pay overall.
    2. Slower Equity Growth: It takes longer to build equity in your home.
    3. Higher Total Costs: While monthly payments are lower, the total cost of your mortgage is higher.

    What’s Next?

    If you’re considering purchasing a newly built home, this new program could make it easier to turn your dream into reality. Contact me today to explore your options, calculate your affordability, and find a mortgage solution tailored to your goals.

    Chat with Jacquie

    Phone:  613-882-3201

    jacquie@jacquiebushell.ca

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