Feds Up Mortgage Payback Period for Some Buyers

The federal government is extending the amortization period on insured mortgages to 30 years for first-time homebuyers.

The addition of five years will help more young Canadians to afford a monthly mortgage payment. Currently, if a down payment is less than 20% of the home price, a homeowner must repay their mortgage within 25 years.

While welcome news, this new rule only applies to purchases of newly built homes — resale homes have been left out — and those priced below $1 million with a down payment of less than 20 per cent.

As most new homes in Toronto are priced more than $1 million, many buyers in the city will be essentially disqualified from eligibility.

The new policy will take effect Aug. 1.