CHMC First Time Home Buyers Incentive
In a highly anticipated announcement on March 19, 2019 the Finance Minister tabled the Federal Budget which included easing measures for housing.
Since 2008 there has been over 30 government imposed regulatory changes introduced. All were aimed at tightening the mortgage landscape making it more difficult to borrow. This is the first time in over a decade that we have seen easing to the rules. Although it wasn’t the results that were widely anticipated, many Canadians will benefit from these additions. More importantly this indicates a shift in perspective from a government level which hopefully begins a new era where we can expect further easing over the coming years.
There are 2 main proposals for housing affordability which were introduced; The First-Time Home Buyers Incentive Program and an increase to the Home Buyer’s Plan.
The First-Time Homebuyer Incentive Program is scheduled to be launched in the fall of 2019 and we expect further details in the coming months as the program gets finalized. Once we receive the final program and have an opportunity to assess we will certainly share this with you and your valued clients.
Today we will focus on the increase to the Home Buyer’s Plan (HBP), the final report was submitted yesterday making this program now active and eligible for qualified buyers. This increase to the HBP withdrawal limit will apply in respect of withdrawals made after March 19, 2019 given that the Purchase and Sale agreement was also signed after this date.
First-Time Home Buyers’ Plan
Currently, the Home Buyer’s Plan (HBP) allows first-time home buyers to withdraw up to $25,000 from their Registered Retirement Savings Plan to purchase or build a new home without having to pay tax on the withdrawn amount. Budget 2019 proposes to increase the HBP limit to $35,000 per first-time home buyer or $70,000 per couple. Clients that are going through the breakdown of marriage or common-law partnership will be permitted to participate in the HBP even if they are not first-time home buyers provided that the separated person lives separate and apart from their spouse or common law partner for at least 90 days.
Here’s an example of some of the ways this program could help your valued clients:
Clients that have access to this program can benefit from the flexibility of increasing their purchasing power by $10K. This provides leverage and further opportunities for you and your client.
An increase to the down payment by $10K will provide your customer approximately $50 per month in savings on their mortgage payments.
Reduced Income Qualification:
An increase to down payment allows clients to qualify for slightly more home. In this specific circumstance a customer looking to buy for $500,000 would need about $3K less in income by increasing their down payment by $10,000. This will help borrowers that are on the cusp of qualifying.
As always, I’m happy to help answer any questions you may have.