Changes for the Ontario mortgage landscape have come into effect as of  December 15, 2024, and it’s crucial for homeowners, buyers, and real estate investors alike to understand their effects. 

I had the privilege of interviewing Toni Ceniti of Toni Mortgages MCC, an experienced Ontario mortgage broker, to break down these shifts. With over 18 years of experience in the mortgage industry, Toni specializes in delivering personalized mortgage solutions and has had the privilege of helping over 50,000 individuals and families secure financing that aligns with their needs and financial goals.

These changes to Ontario’s mortgage rules could be a game-changer for many buyers, but it’s important to consider both the short-term and long-term financial implications. If you’re thinking about purchasing a home or refinancing, it’s a good idea to get professional advice to ensure you’re making the best choice for your situation.

From new qualification rules to policy updates that could impact affordability, Toni helps us make sense of it all and shares expert advice on how to navigate the evolving market.

How will these changes affect mortgage qualification criteria?

Good news for homebuyers! The new rules will make it easier for some buyers to qualify for mortgage insurance, especially those looking to purchase homes priced between $1 million and $1.5 million. Here’s what’s changing:

• For homes priced up to $500,000 – You’ll still only need a 5% down payment.
• For homes priced between $500,000 and $1.5 million – You’ll need 5% down on the first $500,000 of the home’s value, plus an additional 10% on the portion above $500,000.

Before these changes, buyers of homes over $1 million needed to come up with at least a 20% down payment. Now, with the new cap at $1.5 million, buyers can make smaller down payments, which makes it easier to get into a home, especially in higher-priced areas.

Additionally, first-time homebuyers and those buying newly constructed homes can benefit from a 30-year amortization (the length of time you take to pay off your mortgage). This lowers your monthly payments, making it easier to qualify for a larger mortgage, though it does mean you’ll pay more in interest over time.

What are the implications of a 30-year amortization on long-term costs?

A 30-year amortization can definitely make monthly payments more manageable. But there’s a trade-off: you’ll end up paying more interest over the life of the mortgage. 

Here’s why:

With a longer mortgage term, you pay off the principal (the amount you borrowed) more slowly. While your monthly payments are smaller, you’ll pay interest on the loan for a longer period, which means you’ll pay more in total interest than if you had a shorter amortization (like 25 years).

So, while the 30-year option may seem like a great way to lower your monthly payments, it's important to think about how it might affect your long-term finances. Be sure to factor in the total cost of the mortgage, not just the monthly payment, when making your decision.

Will lenders adjust their rates or premiums in response to these changes?

It’s possible that lenders could adjust their rates or premiums based on these rule changes, but it will depend on a few factors, including broader economic trends. Here’s what might happen:

• Lenders could lower interest rates for buyers qualifying for mortgages under the new $1.5 million cap, since these mortgages are insured, reducing the risk for lenders.
• On the flip side, a 30-year amortization might lead to slightly higher rates. Since the loan is outstanding for a longer period, it represents a bit more risk for lenders. Prediction of .20 basis points on the rate
• Mortgage insurance premiums could also see some changes. For example, insurance premiums might be a little higher for mortgages at the $1.5 million level, because the lender’s risk is greater, prediction .20% increase on premium.

All of this means you could see some variations in your mortgage costs, so it’s always a good idea to have your Mortgage Broker shop around and compare offers from different lenders.

What impact do you foresee these changes having on buyers?

These changes should have a positive impact on many buyers, particularly first-time homebuyers or those looking at new construction. By raising the cap for insured mortgages to $1.5 million, buyers in higher-priced markets will have access to larger loans with smaller down payments. This could make it easier to buy in areas where home prices are on the higher end.

The 30-year amortization option also helps by reducing monthly payments, allowing buyers to qualify for larger loans that they might have struggled to afford with a shorter mortgage term. However, while your monthly payments may go down, remember that you could pay more in interest over the long run, so it’s important to keep that in mind when planning your finances.

Overall, these changes should make homeownership more attainable, but they do come with a bigger long-term financial commitment, especially if you’re taking advantage of a larger mortgage or a 30-year repayment term.

Final Thoughts:

These changes to Ontario’s mortgage rules could be a game-changer for many buyers, but it’s important to consider both the short-term and long-term financial implications. If you’re thinking about purchasing a home or refinancing, it’s a good idea to get professional advice to ensure you’re making the best choice for your situation.

If you have any questions or need guidance on how these changes might affect you, don’t hesitate to reach out. We are here to help!

About Toni Ceniti

Toni Ceniti specializes in delivering personalized mortgage solutions with your best interests in mind. With over 18 years of experience in the mortgage industry, she has had the privilege of helping over 50,000 individuals and families secure financing that aligns with their needs and financial goals.

Unlike traditional banks, Toni works for you, providing unbiased advice and a comprehensive range of mortgage products designed to suit your specific situation. Her sole focus is mortgages, building your wealth and ensuring you are mortgage free based on a tailored plan, ensuring that she offers expertise and dedicated service that you can rely on throughout the entire process.

Mortgage Solutions Tailored to You:

• First-Time Homebuyers
• Refinancing
• Debt Consolidation
• Self-Employed Mortgages
• Credit Challenges – Including Bankruptcies, Judgments, Collections, Consumer Proposals, and Bad Credit
• Home Equity Lines of Credit (HELOC)
• New Home Purchases & New Construction Financing
• Investment Property Mortgages
• Reverse Mortgages
• Mortgages for New Canadians and Immigrants
• Spousal Buyouts

Why Choose Toni Mortgages MCC?

• Unbiased Advice: As an independent mortgage expert, Toni is not tied to any bank or lender, giving her the flexibility to offer you the best available options.
• Tailored Solutions: Toni takes the time to understand your unique financial situation and provide a mortgage solution that works for you.
• Competitive Rates: With access to a wide range of lenders, Toni can secure competitive rates that help you save money in the long term.
• Expert Guidance: From pre-approval to closing, Toni provides you with the support and information you need to make confident decisions.

Toni's commitment to exceptional service and integrity ensures that you receive the highest level of professionalism and care. Whether you are purchasing your first home, refinancing, or navigating complex credit challenges, she am here to guide you through the entire process.