The federal government allowed 30-year mortgage amortizations for first-time homebuyers purchasing new builds in August, and the new rules are set to expand in December to everyone looking to buy a newly-constructed home.
Even though monthly payments are lower, mortgages with longer amortizations come at a huge increase in the amount of interest homebuyers will pay over time.
“It’s about making that first home more available for young Canadians, for first-time home buyers,” Federal Finance Minister Chrystia Freeland said on Sept. 16. Nixon believes the 30 year amortization plan is good news for developers and bankers, but in the end homebuyers will pay the price with added interest charges.
“To give the slightest chance to young people you need to give them a 30-year amortization and regrettably that just means there’s a ton of extra interest,” said Butler.
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