While many in the industry thought we might see increases to amortization or relief from the previously imposed stress test, none of those were taken into consideration in today’s underwhelming federal budget.
The announcements we saw in relation to home purchasers were:
1. An increase to the amount accessible from RRSP’s from $25,000 (where it’s been for nearly a decade) to $35,000.
2. Easier access if a borrower has been through family crisis (looking forward to seeing more details on this).
1. Up to 10 per cent for Canadians earning less than $120,000 from CMHC for brand new construction (this is based on new home construction declining over the next 2 years)
2. 5% for resale homes
Example: If a first-time buyer wants to buy a home that costs $400,000, they’d have to come up with a $20,000 down payment, under both the new rules and the old ones.
Normally, they’d have to take out a loan for $380,000 to cover the rest of the purchase price — but under the new program (if it’s a newly constructed home), CMHC could kick in $40,000 toward the purchase price, in exchange for a 10 per cent stake in the home. That brings the buyer’s mortgage down to just $340,000 for the home, instead of $380,000. On a standard mortgage at 3.5 per cent interest, that translates into a monthly mortgage payment more than $200 lower than it would have been for the 25-year life of the loan. More clarity to come out in the fall, as no details were provided related to repayment terms and how the registration of the loan would take place. This area of the budget is far from clear.
Items to note:
• Provincially, B.C. had a similar program that had ended once the NDP were elected.
• In order to use the RRSPs, you still have to save it! Hard to do when most Canadians are feeling the burden of increased costs of living.
• RRSP’s still have to be paid back within 15 years
Here is an article further to today’s Budget
If you have any questions- We’re here to help.
Angela Calla is a 15 year award-winning woman of influence mortgage expert. Alongside her team, passionately assisting mortgage holders get the best mortgage, and educating them on The Mortgage Show on CKNW for over a decade and through her best-selling book The Mortgage Code available on Amazon. To purchase the book click here: The Mortgage Code. Proceeds from a sales will help build a new emergency room at Eagle Ridge Hospital. Angela can be reached at firstname.lastname@example.org or 604-802-3983.