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By: Dana Hrynyk

New Mortgage Changes in Canada: What They Mean for Your Home Buying Journey

In a significant move to address housing affordability, the Canadian government has recently announced several changes to mortgage rules. These modifications aim to make homeownership more accessible, especially for younger generations. Let’s break down these changes and explore how they might affect your path to owning a home. 



1. Extended Amortization Period

Starting August 1, 2024, both first-time buyers and current homeowners will have the option to choose a 30-year mortgage instead of the standard 25-year term. This change can significantly impact your monthly payments.

What does this mean for you?

Let’s look at a practical example:

  • For a home purchase of $750,000
  • Choosing a 30-year mortgage instead of a 25-year mortgage
  • Based on current 5-year mortgage rates
  • Potential savings: Approximately $300 per month

This extended amortization period allows for lower monthly payments, potentially making homeownership more manageable for many Canadians.


2. Increased Price Limit for Insured Mortgages

By December 15, 2024, the price limit for insured mortgages will increase from $1 million to $1.5 million. This adjustment reflects the reality of today’s higher home prices in many Canadian markets.

Who benefits from this change?

This change particularly benefits individuals who:

  • Have excellent employment records
  • May struggle to access a larger down payment
  • Are looking at homes priced between $1 million and $1.5 million

Previously, homes over $1 million required a minimum 20% down payment. This increase in the insured mortgage limit provides more flexibility for buyers in this price range.


Additional Measures to Support Home Buyers

The government has also introduced or enhanced several other tools to assist Canadians in their home buying journey:

  1. Tax-Free First Home Savings Account: A new savings vehicle to help accumulate funds for a down payment.
  2. Increased Home Buyers’ Plan: Enhancements to this existing program to provide more support for down payment savings.
  3. Simplified Lender Switching: Making it easier for homeowners to change mortgage providers.
  4. New Rights for Home Buyers and Renters: Additional protections in the home buying and renting process.

The Bigger Picture

These changes are part of a broader strategy aimed at:

  • Giving Canadians more time to pay off their mortgages
  • Making it easier to qualify for a mortgage
  • Encouraging the construction of new homes to increase housing supply

What’s Next?

As these changes roll out over the coming months, it’s important to stay informed and consider how they might impact your home buying plans. Whether you’re a first-time buyer or looking to make a change in your current housing situation, these new rules could open up new possibilities.

Remember, every individual’s financial situation is unique. It’s always a good idea to consult with a mortgage professional to understand how these changes apply to your specific circumstances.

Have questions about these new mortgage rules or how they might affect your home-buying journey? Don’t hesitate to reach out. We’re here to help you navigate these changes and find the best path to homeownership for you.

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By: Dana Hrynyk

Federal Budget 2024: What You Need to Know

Following a string of housing announcements in recent weeks, the Canada’s Housing Plan released on Friday, April 12, 2024, alongside Budget 2024 details an ambitious set of housing initiatives aimed at tackling the housing crisis through increasing housing supply, helping homebuyers and renters, and supporting innovative solutions for builders. 


Increase the capital gains tax inclusion rate

The government is increasing the inclusion rate on capital gains realized annually above $250,000 by individuals and on all capital gains realized by corporations and trusts from one-half to two-thirds. Individuals will continue to pay tax on 50 per cent of any capital gains up to $250,000 per year. The new rules will apply to capital gains realized on or after June 25, 2024.

Selling your principal residence will continue to be exempt from capital gains taxation. TRREB will ensure we hold the government to this commitment.

Increase in Home Buyers' Plan Limit

The Home Buyers’ Plan (HBP) limit will increase from $35,000 to $60,000 for an individual or $120,000 for a couple, allowing first-time homebuyers to withdraw more from their Registered Retirement Savings Plans (RRSPs) for down payments, benefiting from the tax advantages of RRSP contributions.

Canadians withdrawing from their HBP between January 1, 2022, and December 31, 2025, will benefit from an extended repayment grace period, now up to five years, allowing them to better manage mortgage payments.

 

Extended Mortgage Amortization Periods

The budget will introduce a provision for 30-year mortgage amortizations for first-time homebuyers purchasing newly built homes, starting August 1, 2024. This extension aims to make monthly mortgage payments more manageable.

Permanent Amortization Relief

Enhancements to the Canadian Mortgage Charter will include permanent amortization relief for existing homeowners meeting specific criteria, thus allowing them to reduce their monthly mortgage payments as needed.

Housing Accelerator Fund Enhancement:

An additional $400 million will be added to the Housing Accelerator Fund, raising its total to $4.4 billion, aiming to fast-track the construction of an additional 12,000 new homes over the next three years.spring is a great time to change the filters and call in to have the unit serviced if needed.

Support for Renters

New measures for renters include launching a new $15 million Tenant Protection Fund, creating a new Canadian Renters’ Bill of Rights, and making sure renters get credit for on-time rent payments.

Making Your Home Cheaper to Heat and Easier on the Environment

To help Canadians lower monthly home heating costs, the government is reinvesting $903.5 million into a new Canada Greener Homes Affordability Program to support energy efficient retrofits for homeowners and renters with low- to median-incomes.

Accelerated Capital Cost Allowance Increase

The federal government is increasing the post-tax Accelerated Capital Cost Allowance from 4% to 10% for purpose-built rentals. This will act as a major incentive for the construction of a new supply of purpose-build rentals.

In addition to these measures:

  • The government intends to restrict the purchase and acquisition of existing single-family homes by large corporate investors. The government will consult in the coming months and provide further details in the 2024 Fall Economic Statement.
  • The government is also considering introducing a new tax on residentially zoned vacant land and will launch consultations later this year.
  • The government intends to establish a subsidiary of the Canada Mortgage and Housing Corporation (CMHC) to deliver flood reinsurance.

The 2024 federal Budget places a strong focus on enabling more housing supply; however, TRREB will continue to monitor the potential impact of new tax measures on housing supply and affordability.

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