30-year Mortages For First-time Buyers Now In Effect

In April of this year, the Canadian government announced in the federal budget that first-time home buyers of new construction dwellings can obtain 30-year (up from 25-year) amortization periods for insured mortgages, making it easier to qualify. This change officially took effect on August 1 (https://bit.ly/3yzhAoN). In addition, building on the Tax-Free Home Savings Account, as of April 16^th, first-time buyers will be able to withdraw up to $60,000 (up from $35,000) from their RRSPs without tax penalties to buy or build a home (https://bit.ly/4dqZjci). These measures add up to an incredible break for first-time buyers who qualify and should stimulate more new home and condominium construction.

The amortization extension, which enables more affordable monthly mortgage payment options, is part of the federal government’s plan to unlock nearly 4 million more homes. Some restrictions apply, including that at least one of the borrowers on the mortgage application has never bought a home before and is not living in a home they or their spouse owned in the last four years. The home they want to buy must be new and not occupied residentially. This is a great option for those purchasing a home that is closing soon or over the next few years.

The 5-year extension of the maximum amortization period has long been advocated for by the Canadian Home Builders’ Association. Although the measures taking effect this month are steps in the right direction, we still need more action from our governments to create a favourable environment for real estate to thrive.