The Federal Government has announced a couple of measures to help first time home buyers get into their first home. The first involves increasing the amount of money you are allowed to withdraw from your RRSP to purchase your first home from $35,000 to $60,000. You need to pay this amount back into your RRSP over a 15-year period. Previously you had to start this payback period within 2 years of the withdrawal. Now you can wait up till 5 years. But remember the First Home Savings Account is actually a better deal. Because you don’t have to be paid back the money into a FHSA, the money is never taxed!
Second, the government is making 30-year amortization available to insured mortgages for first time home buyers if they are buying a new build. Interesting concept in that it helps first time home buyers while at the same time stimulate building of new homes. Typically, insured mortgages are only available for properties that are less than a million dollars and only 25 year amortization was allowed. The drawback to limiting this to new builds will restricts the number of new home buyers that will benefit.
The accompanying table shows how a 30-year amortization reduces the monthly mortgage payments; and thus, making the home purchase more affordable. Reach out if you are curious how this changes your purchasing power.
For more information, go to the government website at: https://www.canada.ca/en/department-finance/news/2024/04/putting-home-ownership-back-within-reach-and-supporting-canadian-homeowners.html
