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Feds Up Mortgage Payback Period For Some Buyers

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.