Exciting News for First Time Home Buyers: The Return of 30-Year Insured Amortizations

Great news for those looking to buy a newly built home! The 30-year amortization option is back for high-ratio borrowers, marking its return since 2012. This program is available for first-time buyers purchasing newly-built homes. While it might not make a huge difference for everyone, it's definitely worth exploring the options.

Here are seven key points to help you understand and take advantage of this opportunity:

1. Lower Monthly Payments
Many buyers, especially millennials with high total debt service (TDS) ratios, focus on monthly payments rather than the overall cost. With the new 30-year amortization, you could reduce your monthly mortgage payments by over 8%. For instance, a $500,000 home with 5% down and a 4.59% interest rate would cost $2,522 per month with a 30-year term, compared to $2,764 per month with a 25-year term.

2. Increased Purchasing Power
Lower monthly payments also mean lower debt ratios, allowing you to afford approximately 8% more home. This can significantly boost your buying power and help you find a home that better suits your needs.

3. Improved Cash Flow
While extending the amortization term might mean paying more interest over time, it provides extra cash flow. This flexibility can help you pay off high-interest debt, invest, or save for retirement. It’s an opportunity to grow your net worth more effectively.

4. Eligibility Criteria
Here’s what you need to know to qualify:
- Maximum purchase price: $999,999
- Down payment must be less than 20%
- The property must be newly built and never lived in (except for interim occupancy)
- At least one applicant must meet one of these criteria:
  -- First-time homebuyer
  -- In the last 4 years, the borrower has not lived in a home owned by themselves or their current spouse/common-law partner
  -- Marriage or common-law partnership ended 90+ days before closing

For more details, check the Sagen FAQs.

5. Be Aware of Market Realities
Transparency is key. While the 30-year amortization offers benefits, it won’t make expensive markets like Toronto suddenly affordable. Additionally, many builders require significant down payments on new constructions, although smaller deposits are becoming more common.

6. Act Quickly
If home values drop this year, as some economists predict, acting now could be advantageous. The 30-year amortization might allow you to buy sooner and benefit from potential future capital appreciation.

7. Flexibility with Amortizations
Remember, you’re not locked into a 30-year term. You can make extra payments to shorten the amortization period. Plus, with inflation, paying back your mortgage with future dollars that are worth less can make fixed payments easier to manage over time.

If you have any questions or need further assistance, feel free to reach out. I’m here to help! Simply Book a Call here to discuss your options