The changes, which come into effect on August 1, are part of an ambitious plan to increase construction of 2 million homes and help renters save for down payments.
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First-time buyers buying a new-build home in Canada will soon be able to get a mortgage with installment payments over 30 years — an option some real estate agents want to see available to all buyers and all types of homes.
Canada Mortgage Charter changes to come into effect August 1, part of ambitious plan announced on friday Canadian Prime Minister Justin Trudeau has proposed addressing housing affordability.
“The goalcanada housing plan“The target is to build 3.87 million new homes by 2031, 2 million more than current forecasts, in part by working with housebuilders and housing providers to build homes and apartments on public land and underutilized properties across the country .
“Young Canadians are renting more than ever before and housing prices are prohibitively high, keeping them out of their own neighbourhoods,” the Prime Minister’s Office said in a statement. “Families are finding it difficult to find a good place to settle down. Build Homes cost too much and projects take too long to complete. We need to build more homes in Canada, and millions of them need to be built.
The program also aims to make it easier to own or rent a home by promoting tenants’ rights, encouraging the use of rent payment history to improve credit scores and increasing tax-free retirement account withdrawal limits for first-time down payments. Starting from $35,000 to $60,000.
In addition to using a Registered Retirement Savings Plan (RRSP) for a down payment through a federal program called the Homebuyer’s Plan, Canadians can save up to $40,000 in a new tax-free first-home buyer savings account created last year. Dollar.
Finance Minister Chrystia Freeland said more than 750,000 Canadians have opened tax-free first home savings accounts.
Chrystia Freeland
“This account is really making a difference for Canadians, and it’s clear that younger Canadians are looking to buy their first home,” Freeland said in a report. statement. “They are saving their hard-earned money to turn this dream into a reality.”
Freeland said allowing first-time homebuyers to apply for a mortgage with a 30-year amortization plan would help lower monthly payments. However, the policy only applies to new homes, condos and townhouses, not existing homes.
Although the Canadian Real Estate Brokers Group warm welcome In terms of overall housing plans, Ontario Real Estate Association CEO Tim Hudak said the organization believes all Canadians should have the option to buy a home with a 30-year amortization plan.
Tim Hudak
“As families look for a great place to call home, their budgets shouldn’t depend on whether they buy a new construction home or a resale home,” Hudak said in a report. statement. “In the midst of a housing affordability crisis, many Ontario households, not just first-time homebuyers, will benefit from 30-year mortgage amortization relief.”
While most U.S. homebuyers choose a 30-year fixed-rate mortgage, home loans working differently in Canada. Monthly payments are typically based on a 25-year amortization schedule, and most mortgage terms are five years or less. This means the borrower will have to renew their mortgage multiple times before owning the home.
“We know some homeowners are worried about their mortgage payments and renewing their mortgages at higher interest rates,” Freeland said.
To help address these issues, the Canada Mortgage Charter is also being revised to require lenders to contact borrowers up to 24 months before mortgage renewal. The new measures will “provide all homeowners with permanent amortization relief” at no cost. or fine.
For example, if a homeowner has an amortization period of 25 years and previously received a temporary hardship extension to 35 years to lower monthly payments, a permanent extension may be available under certain circumstances, she said.
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