Currently if a down payment is less than 20% of the home price, the longest allowable length of time a homeowner has to repay their mortgage is 25-years.

That’s called amortization.

Finance Minister and Toronto MP Chrystia Freeland has announced effective August 1, the government will extend it to 30-years.

 

 

”By extending amortization, monthly mortgage payments will be more affordable for young Canadians who want that first home of their own,” said Freeland.

As of next Tuesday; budget day, the government will nearly double the amount first-time buyers can withdraw from RRSPs to buy a home — from $35,000 to $60,000.

Anyone who has or will make withdrawals between January of 2022 and the end of next year will also receive more time to start repayment –up to 5-years total — rather than 2.

Ottawa’s also announced changes to the Canada Mortgage Charter that will include an expectation that financial institutions offer permanent amortization relief to protect existing homeowners who meet certain eligibility criteria.

That would allow eligible homeowners to reduce their monthly mortgage payment to a number they can afford for as long as needed.