The Canadian government is taking steps to make homebuying easier for Millennials. According to the budget proposal of 2019, the government intends to put forth $1.25 billion over a three year span from the CMHC First-Time Home Buyer Incentive.
Borrowers would still have to figure out a down payment of at least 5% of the purchase price, but they would still receive an incentive of up to 10%, which would lower the mortgage.
The incentive covers 10% for newly built homes and 5% for existing homes. A few of the catches: Your annual income must be under $120,000 to participate, and you will have to eventually repay the incentive although officials have not decided how that will unfold just yet.
The federal stress test will still be required to ensure buyers will be able to repay the debts at even higher rates.
The government is also enhancing the Home Buyer’s Plan which allows first time buyers to take out up to $25k from their RRSP to finance a home, without paying tax on withdrawal, they are proposing to raise the cap to $35k, and the new limit would apply to withdrawals made after March 19th 2019.
The only problem is that more borrowing means that housing prices are likely to go up, and may encourage Canadians to take on more debt. Buyers must keep in mind that the government is not extending the program’s repayment timeline, so any money taken out of their RRSP must be put back with 15 years to avoid the withdrawal being added to their taxable income. Now Canadians will have to repay a max. of $35k instead of $25k over the same period.
Are you a first-time home buyer looking for the best guidance in the business? Call us today! We have agents standing by to help you with any questions of concerns you may have.
Sutton Group Realty Systems Inc., Brokerage
416-896-333 / 905-896-3333