For many first-time home buyers in Ottawa and across Ontario, qualifying for a mortgage that meets your needs can be challenging. Rising home prices make affordability a concern, even outside major cities like Toronto. The return of 30-year amortizations for insured mortgages in 2024 gives buyers a way to qualify for more while keeping monthly payments manageable.

What is a 30-Year Amortization?

Amortization is the time it takes to pay off your mortgage. A 30-year amortization spreads payments over a longer period than the standard 25-year term. This reduces monthly payments and allows you to qualify for a higher purchase price.

How a 30-Year Mortgage Can Increase Your Buying Power

One of the biggest benefits is the extra money you can borrow. For example, if you earn $100,000 a year:

• A 25-year amortization might allow you to qualify for a $430,000 home.
  
• A 30-year amortization could raise that to $460,000—an extra $30,000 for your purchase.

Comparing 25-Year and 30-Year Amortizations

• 25-Year Amortization: Lower overall interest but higher monthly payments.
  
• 30-Year Amortization: Higher total interest but lower monthly payments and more buying power.

Ottawa Housing Market Remains Accessible

Compared to Vancouver or Toronto, Ottawa and many parts of Ontario still offer relatively affordable homes. While home prices in larger cities have skyrocketed, Ottawa homes are generally more in line with local household incomes, making it easier for first-time buyers to enter the market.

Paying Off a 30-Year Mortgage Faster

Many buyers worry about the extra years of payments. The good news is you can still pay it off in 25 years—or less—by making extra payments. For instance, adding $250 per month to a $500,000 mortgage with a 30-year amortization can reduce the term back to 25 years.

Tips to Speed Up Your Mortgage Payoff:

• Make bi-weekly payments instead of monthly.
  
• Increase payments when your income rises.
  
• Use lump-sum payments whenever possible.

Need Mortgage Advice?

A 30-year amortization can help first-time buyers in Ottawa and Ontario enter the housing market sooner. While it may increase overall interest costs, smart repayment strategies can offset that. If you’re planning to buy a home in 2025, a 30-year mortgage is worth considering.

If you have questions about amortization options, qualifying for a mortgage, or strategies to pay off your home faster, reach out to a local mortgage professional. We can help you plan a mortgage that fits your budget and goals.