August 2024 Poll

How many first time homebuyers have ever purchased newly built homes in the first place?  When we bought our first home 30 years ago, all the new construction was large houses (more than we needed as a young newly-married couple starting out) on the edge of the city that we couldn’t afford in the first place.  I don’t know real estate markets intimately, but I don’t see that situation as having changed for the better from an affordability perspective.  Now, if there were homebuilders actually building smaller starter-type homes, then perhaps it might make sense for a few people if it really suited their circumstances.

It seems to me this is another government announcement designed to make it look like they are doing something without having a significant effect on anything beyond adding more rules / regulations to consider.

By Derek T on August 16, 2024

A 30 year term could be used as a temporary measure, to “get one’s foot in the door” of a home purchase.  At today’s interest rates, the 30 year term reduces mortgage payments by about 8%, while increasing total interest by about 24% over the entire 30-year period. But remember that in a few years the mortgage can be renewed on different terms, and the buyer can switch to a shorter amortization period at that time, as finances permit.  Also, with most mortgages, the buyer always has the option to increase payments as finances permit.

By Daniel on August 15, 2024

I would never recommend to any one 30 year amortization period. This sound like and act of desperation.  No one would willingly offer to pay double the original house price as this evidently could lead to.  Mortgage should be paid off as fast as one is able to do that.  Carrying debt into retirement age does not sound like a smart idea.  Do these mortgages have special, beneficial terms attached?

By krystyna on August 15, 2024

I would not recommend this option to my clients as even with a 30 year amortization - it does not significantly reduce the monthly mortgage payment as the additional interest cost will eat up most of the lower payment opportunity.  Again, in my observations, this NDP/Liberal coalition government really cares little of the taxpayer trying to purchase their first home - and anything they try to sell the taxpayer must benefit themselves and their party first - the taxpayer benefits very little.  A 30 year amortization will only benefit the banks (more profit) and not really assist any first time home buyers.

Now, bring back the 30 year mortgage WITHOUT the mortgage loan terms (ie: 5 years), and this may help the new home buyers - but the system right now only benefit the mortgage lenders and not the borrower.

By Gaetan Ladouceur on August 08, 2024

I would not recommend this option as the best options are generally to pay the mortgage off in the least amount of time. When you extend the amortization period, especially to 30 years, the homeowner will end up paying double what the home actually costs.  That is a generalization as it depends on the actual interest rate.  However, if it is a lower interest rate, pay it off quicker.  If this cannot be done, perhaps the home is too much for now and waiting might be more beneficial in the long run.
Open a FHSA and work on getting more funds for down payment to lower the amortization period.

By Robert on August 07, 2024