Positive news for First Time Home Buyers
Following the Bank of Canada’s prime lending rate announcement earlier this week. Disappointing yet expected news, no changes have been made and the BOC has held their position.
On a more positive note, there are some changes that are coming into effect that will put the power back in the hands of the buyers. With the upcoming release of the federal budget, the Canadian Government has made a couple updates that will have an immediate positive effect for First Time Home Buyers.
Effective August 1, 2024
Finance Minister Chrystia Freeland announced the federal government will allow 30-year amortization periods on insured mortgages for first-time homebuyers purchasing newly built homes.
Under the current rules, if a down payment is less than 20% of the home price, the longest allowable amortization — the length of time a homeowner has to repay their mortgage — is 25 years.
“By extending amortization, monthly mortgage payments will be more affordable for young Canadians who want that first home of their own.”
Mortgage Professionals Canada CEO Lauren van den Berg called it a “step in the right direction” and said extending the amortization period “will help level the playing field for first-time homebuyers.”
Effective April 16, 2024
As part of the announcement, Freeland also said the government will raise the amount first-time homebuyers can withdraw from their RRSPs — to $60,000 from $35,000 — to buy a home. This will take effect April 16, the day the federal budget is set to be released.
The government said the change reflects the reality that the size of a down payment and the amount of time needed to save up for one, are much larger than they used to be.
People who have made or will make withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment — up to five years in total rather than two.
Ottawa said those changes are meant to work in tandem with the First Home Savings Account, which it launched last year. The rules governing that program allow prospective homebuyers to start saving for up to 15 years once they open an account, with an annual $8,000 deposit cap and a lifetime contribution limit of $40,000.
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If you or anyone you know is a First Time Home Buyer, please share this information. Additionally, if you have questions or want to discuss how these changes improve your buying power, please reach out.
Greg Horvath
(604) 788-9454
greg@greghorvath.ca