Over the past few months, changes in residential mortgage terms are affecting how ordinary homeowners pay for their own home loans. The most recent change is with regards to the length of an average mortgage. Previously, a typical home loan would cover a period of 35 years. Today, it has now been reduced to 30 years. While five years doesn’t seem that long, it can increase a homeowner’s monthly payments by as much as $100 per month.
This increase isn’t such a big concern, especially for those who are already living within their means, but it might be hard for households who are already living on a budget. For those haven’t yet put down their first payment on their new home, they have the option of borrowing from their Registered Retirement Savings Plan. As of now, the limit is $25, 000 from each spouse. This means that the total possible down payment for those who qualify with their RRSP is $50, 000.
Couples who have a Tax- Free Savings Account are also able to take up to $15, 000 in contribution amounts. This can be doubled if both spouses are co- signatories. For those who already have their mortgage going, many banks and cooperatives can offer advice to these homeowners on how it will affect their bottom line. Some of these institutions will even offer some form of debt restructuring if the homeowner is unable to cope with the new change. The new mortgage term will therefore not be as detrimental as some people make out to be.
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