Yesterday's Federal Budget hinted at the possible expansion of access to 30-year insured mortgages, currently only available to first-time homebuyers and purchasers of newly built homes.
What would this actually mean for buyers & sellers on the Sunshine Coast?
Compared to the Lower Mainland, the Sunshine Coast is an entry-level housing market, with the average home price here being literally half of that in places like Squamish or Port Moody. We also have fewer new homes, so these new rules would mean that aspiring homeowners would have more options to purchase a home here.
Let's use a real property as an example:
1560 Larchberry Way in Gibsons
3-bedroom detached house
Offered at $749,000
Let’s assume a buyer makes the minimum down payment.
Compared to a 25-year amortization, a 30-year amortization could mean:
$341 LESS per month in mortgage payments.*
$9,071 LESS per year in household income required to qualify.*
That added monthly cash flow means more buyers are potentially able to qualify for homeownership. A positive for local sellers.
Of course there's a trade-off, in that a longer amortization comes with a higher mortgage insurance premium & more interest paid over time. Lower monthly payments don't necessarily mean a lower overall mortgage cost.
More options are a good thing. Understanding the numbers & choosing what works best for your situation is even better.
This is not financial advice, and you should speak with a mortgage broker regarding your specific situation. If you need a mortgage broker, I am happy to refer you to one of the experts that I work closely with.
*Assumptions: Owner-occupied purchase, $5,000/year gross property taxes, $200/month heating, 5-year fixed closed mortgage at 5% with semi-annual compounding, 7% qualifying rate, 39% GDS ratio, no other debts. Mortgage insurance premiums included.
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