Navigating NOSI & New Rules for First-Time Homebuyers

Neil: Welcome back to "Getting Your Sh*t Together" – the podcast where we break down financial and real estate news in a way that makes sense, without the jargon. I’m Neil Joseph, and as always, I’m joined by my co-host, Jerome Christensen.

Jerome: Hey, Neil! Today’s topic is something a lot of homeowners may have heard of but might not fully understand—Notices of Security Interest. If you’ve ever been in the middle of refinancing or selling your home and suddenly found out there’s an unexpected hiccup, this might be the reason.

Neil: Right. So let’s start with the basics. A Notice of Security Interest is a legal notice that can be placed on the title of your property. Essentially, it’s a claim made by someone—usually a contractor or a service provider—who hasn’t been fully paid for work done on your home. It’s their way of securing payment by attaching a legal hold to your property’s title.

Jerome: Think of it as someone saying, “You still owe me money, and I’m going to make sure I get it before you can sell or refinance this house.” Now, while it might sound fair from the perspective of the contractor, these notices often created big problems for homeowners—especially those who didn’t realize they were even there.

Neil: Exactly. And that’s why this issue has been such a thorn in the side for a lot of people. You might be planning to renew your mortgage, tap into your home’s equity, or even sell your property, and suddenly you’re hit with a surprise—there’s a Notice of Security Interest on your title that’s stopping you in your tracks.

Jerome: Imagine this: You’re ready to move forward with your refinance or sell your home, and all your ducks are in a row. But then you find out there’s a hold on your title. You can’t move forward until it’s dealt with. It’s like planning the perfect vacation, but the airline tells you last-minute, “Sorry, you’re grounded until we get this sorted.”

Neil: [Laughs] Yeah, that’s not the kind of last-minute surprise anyone wants! And for those of you who have experienced this, we get it. It’s frustrating, and it may have felt unfair. These notices were supposed to ensure contractors got paid, but they often left homeowners in the dark, scrambling to figure out what went wrong.

Jerome: So today, we’re talking about the good news. The Ontario government has stepped in and made some changes to how Notices of Security Interest can be placed on a property title. We’re going to explain why these changes are a big deal and how they’ll positively impact homeowners like you.

Neil: But first, let’s give some context. These notices were originally put in place to protect contractors and other service providers who might not get paid for work they did on your home. The idea was, if they didn’t get their money, they could file a Notice of Security Interest against your property, essentially saying, “I’m owed this money, and until I get it, you can’t refinance or sell without paying me first.”

Jerome: In theory, it makes sense, right? You want to make sure that the people who worked on your home get what they’re owed. But the execution left a lot to be desired. Many homeowners found out about these notices at the worst possible time—when they were in the middle of a financial transaction—and that caused delays, frustration, and even additional costs. One of the major players in these nuisance Notices were: Hot Water Heater, Furnace and A/C Companies placing these on properties without the owners knowledge

Neil:** Welcome back to “Getting Your Sh*t Together!” I’m Neil, and as always, I’ve got my co-host Jerome here with me. Today, we’re diving into some big news for first-time homebuyers—big enough that it’s making waves in the mortgage world. Jerome, how excited are you to finally have a reason to talk about something other than your classic cars?

Jerome:** Oh, I’m pumped, Neil! We’re talking about the Federal Government making mortgages *fun* again—because who doesn’t love 30 years of debt?

Neil:** Haha, well, “fun” might be a stretch. But yes, there are two new changes aimed at helping first-time buyers get into the market. We’ve got the new $1.5 million purchase price limit for insured mortgages, and, they’re also allowing 30-year amortizations for first-timers. Both effective from December 15, 2024. If you want to take advantage of these options, then your mortgage application needs to be submitted after this date. Realistically speaking, you can take advantage of these options only if your purchase is closing couple of weeks after 15th Dec (due to the administrative work involved). So, let’s get to it.. there is quite a lot to unpack.

**Jerome:** And let’s face it, if you’re a first-time buyer in Toronto, you’re probably already thinking, “Wait, how am I supposed to afford anything here?” Don’t worry, we’ve got your back—or at least, we’ll try.

### Segment 1: **The New $1.5 Million Purchase Price Limit**

**Neil:** Let’s kick things off with the $1.5 million purchase price limit for insured mortgages. So, before this change, if you were looking at a property over $1 million, you needed at least a 20% downpayment. Now, first-time buyers can go up to $1.5 million with less than that, as long as they get mortgage default insurance.

**Jerome:** Yeah, which is great if you’ve been feeling like $999,999 was just *too* cheap for your tastes. You can now bump up your budget and still put down, let’s say, 10%. I mean, who doesn’t love the idea of a slightly smaller downpayment and a much bigger mortgage payment? It’s like getting a bigger slice of the cake... and then eating it for 30 years!

**Neil:** Haha, exactly. But in all seriousness, this change is mainly going to help buyers who already have a higher income—about $205,000 or more—PLUS a downpayment of more than $75,000. It’s still not easy, but it opens up more options for what is probably a small section of prospective buyers. Let’s review this chart with a range of scenarios (existing and soon going to be) that facililate the purchase of property for $1.5M. As you can see, one would need a household income of $300k and a downpayment of atleast $125,000 in order to purchase a $1.5M property using an insured mortgage. At the lower end of the income range, one would need an household income of $222k and $300k downpayment to make such a purchase using a conventional mortgage since they would have 20% downpayment. So, it quite a large range depending on how much income and downpayment is available. Mind you closing costs in addition to the stated downpayment figures! It’s not easy and won’t be the case for a vast majority of the prospective homeowners.

**Jerome:** Right, if your household income is up there and you’ve got some cash saved up, it’s not a bad opportunity to get into the market. But you’ve got to plan smartly. Otherwise, you might find yourself eating ramen noodles for a while! Just look at the interest costs over the 5 year period!

**Neil:** And that’s where a mortgage broker comes in. We can help you figure out what’s feasible based on your income and downpayment. Reach out if you would like a personalized chart of options that you can use for your purchase.

### Segment 2: **The 30-Year Amortization Rule**

**Neil:** Now, let’s move on to the second big change: 30-year amortizations for insured mortgages, starting December 15, 2024. Jerome, what’s your take?

**Jerome:** Well, Neil, 30 years is a long time, but, it does help reduce those monthly payments at the onset. And if you’ve been sweating the income requirement, this could make it easier to qualify. It’s like stretching a rubber band... just, you know, don’t let it snap!

**Neil:** Haha, well put. Let’s break it down with an example. If you’re looking at an average-priced property in the GTA, say around $1,068,700, and you want to go for the 30-year option, your household income requirement drops by about $13,750. So, that’s a relief in order to get into your new home.

**Jerome:** So, for anyone who’s been counting every penny and thinking, “How on earth am I supposed to show that much income?”—this might be the breathing room you need. But remember, stretching it to 30 years means you’re in it for the long haul, folks. You’ll end up paying more interest in the long run, so keep that in mind when you’re making those “forever home” plans.

### Segment 3: **How It Affects You**

**Neil:** Alright, so we’ve got these two changes—the higher price limit and the longer amortization. The big question is: does this really make a difference for first-time buyers?

**Jerome:** It can, especially if you’re in a high-priced market like Toronto or Vancouver. With the 30-year option, you could buy a pricier home for almost the same monthly payment as before, just with a bit more downpayment. It’s like buying an extra bedroom for your houseplants—or, you know, your kids, if you prefer them.

**Neil:** Haha, exactly. But there are still challenges. Builders often require 20% down on new builds, and new construction homes can be more expensive than resale ones. So, I do not know how much its going to benefit in the new construction space.

**Jerome:** Plus, even though the government is trying to level the playing field, existing homeowners with equity still have the upper hand in the resale market. They can potentially throw down bigger downpayments and outbid first-time buyers. It’s like showing up to a water fight with a squirt gun while the other team has a fire hose!

**Neil:** And this policy doesn’t address supply issues, which means demand is still high. Stretching payments for 5 more years doesn’t build more homes. It just means you have the ability to borrow more and keep paying more for the home.

**Jerome:** Exactly. So, if you’re using this policy to your advantage, remember that you’re signing up for a long commitment—30 years of mortgage payments can feel like a lifetime. You don’t want to feel like you’re handcuffed to your house, especially if it means missing out on, say, vacations, saving for retirement, or even just enjoying life!

### Segment 4: **Closing Thoughts**

**Neil:** So, Jerome, what’s our advice for our listeners?

**Jerome:** Well, if you’re serious about getting into the market, take advantage of these changes, but be smart about it. Don’t just jump in because there’s a shiny new option. Sit down with a mortgage broker (Think Neil and Me!), and figure out your long-term goals. Think about not just what you can afford now, but what’s sustainable over the next 5 to 10 years. Review the blog posts in the show notes to look closely at what these options could cost you just in the first 5 years of mortgage payments.

**Neil:** Exactly. These new rules can give first-time buyers a bit more flexibility, but it’s important to plan ahead and know what you’re getting into. And hey, if you do it right, you’ll look back in 10 to 15 years and be glad you made a smart choice.

**Jerome:** That’s right—because who wants to be that person still paying off their mortgage when they’re 75? Not me, and definitely not you, Neil!

**Neil:** Never, I wouldn’t want it for anybody. Thanks for tuning in, everyone. If you’ve got questions or need help figuring out your options, give us a shout. We would be happy to help!

**Jerome:** And remember, if you’re struggling with mortgage math, just think of it as fitness for your brain... except, you know, with way more numbers.

**Neil:** See you all next time!

Neil: Exactly. And that’s why the Ontario government has stepped in with new regulations. These new rules make sure homeowners are better protected and, more importantly, that there’s more transparency around when and why a Notice of Security Interest can be placed on your title. Now, these notices can’t just show up like an uninvited guest at your dinner party.

Jerome: Thank goodness! So, here’s the good news: under the new policy, there’s better oversight, and homeowners will be notified properly if a Notice of Security Interest is being added to their title. You’ll have more control and fewer surprises when it comes to refinancing, selling, or renewing your mortgage.

Neil: And if you’re thinking, “Great, but who does this benefit?” Well, the answer is—you! Homeowners. This change puts the power back in your hands. No more unexpected delays because of a notice you weren’t aware of. You’ll now have clearer pathways to resolve any disputes, and the process for removing these notices has been simplified.

Jerome: That’s a huge win. Homeowners can now rest a little easier, knowing they won’t get stuck in a long legal back-and-forth just because of some paperwork they weren’t aware of. And it’s not just about refinancing or selling—this applies to mortgage renewals, too. You don’t want to be held up just because someone’s placed a claim on your title.

Neil: So, if you’ve ever felt like you were trapped by a system you didn’t fully understand, know that the new rules are here to help. If there’s a Notice of Security Interest on your title, you now have more options to dispute it or resolve it faster. And that’s real progress.

Jerome: Exactly. So, take a breath! These changes are designed to make homeownership a little less stressful and to protect you from unnecessary roadblocks. Of course, if you ever find yourself dealing with title issues, we’re here to help you navigate the process.

Neil: And remember, if you’ve got any questions about how this might impact your mortgage or your plans to sell, don’t hesitate to reach out. A mortgage professional or real estate lawyer can guide you through the process and help make sure everything’s in order.