Mortgage professionals agree, one way to solve the crisis of affordability for new home buyers is to change the amortization allowance on insured mortgages from the current 25-year limit to 30 years. Longer amortization periods are nothing new. The concept has been around since the 1950s when young growing families wanted a place to call home.
Could this ease the burden for first-time homebuyers and make housing more affordable for new entrants to the market? Let’s look at the numbers:
If you are in the fortunate position of putting down 20% or more, you could qualify for a 30-year amortization period, which would increase the amount of mortgage you would qualify for.
Household gross income $100,000
25 year amortization
Purchase price $600,000
Down payment $120,000
Maximum mortgage amount $480,000
30 year amortization
Purchase price $670,000
Down payment $134,000
Maximum mortgage amount $536,000
(*Based on stress test rate of 5.25%, a freehold property, annual property taxes $4,500, heating factor of $100 per month and approved credit score.)
Notice that your purchase price would be increased by $70,000 simply by utilizing the 30-year amortization. In today’s competitive market, you want every advantage you can find. Maybe the affectionately known, “Bank of Mom and Dad” could help in order to maximize your down payment and increase your borrowing potential.
Mortgage lenders are being incredibly innovative by introducing new lending products. My job is to help find the best fit for your mortgage needs. No strings (or fees) attached. Let’s talk mortgage financing today!
Celebrating My Ambassador’s Club Bronze Award
Working hard to meet the mortgage financing needs of my clients is nothing new, but being acknowledged for my efforts is truly gratifying! Last month, I was inducted to Mortgage Centre Canada’s Ambassador’s Club, winning a Bronze Award in recognition as a Mortgage Specialist who has funded $15 to $25 million during the 2021 fiscal year. Thank you for your trust and confidence.
Celebrating Birthdays
