- Raised withdrawal limits on RRSP’s
- New funding for first-time home buyers to finance up to 10 per cent and reduce their monthly mortgage rates
- $10 Billion funding for new housing supply challenge and to build 42,500 new units
Finance Minister Bill Morneau has recognized that in recent years due to price gains and mortgage rule changes that it has become increasingly difficult for first time-buyers, especially those just starting out in the labour market to buy a home.
The government has created a $1.25 billion incentive program where prospective buyers can apply for financing of their mortgage through a shared equity program by Canada Mortgage and Housing Corporation (CMHC).
CMHC will be providing up to 10 per cent funding for new homes and 5 per cent for existing homes to reduce mortgage costs for low- to mid-income buyers. This financing would apply to insured mortgages, when the buyer puts less than a 20 per cent down payment on the property.
This new program, ‘First-Time Home Buyer Incentive’ is set to launch in September, and will be available to first-time buyers up to maximum annual household incomes of $120,000. The amount of the insured mortgage would be capped at four times income, or up to $480,000.
“With a shared equity mortgage, first-time home buyers would save money every month, giving them more money to pay down their insured mortgage sooner and for other priorities,” the government had stated in their budget documents that were released this past Tuesday.
“Sales should be boosted by this, so should prices,” said Brian DePratto, an economist at Toronto-Dominion Bank. “At the margin, there is more upside to demand.”
Other positive changes have been made to the federal budget news in regards to RRSP accounts and other funding; as first-time buyers will be able to withdraw $35,000 or $70,000 per couple, instead of $25,000 from their registered retirement savings plans, which hasn’t been changed in a decade.
The government is also adding $10 billion over a nine-year period to an existing program to entice more developers to build rental units. This funding will build 42,500 new units and will allocate $300 million to a new housing supply challenge that will entice cities to make more space for housing.
“There aren’t enough homes for people to buy or apartments for people to rent, that makes finding a good place to live too expensive – beyond what many people can afford” Morneau said finance minister Bill Morneau.
Things are definitely looking up for first-time buyers!
Contact us if you want to see some potential homes that are in your budget and to know how to get in contact with the right mortgage representative.