New Mortgage Rules For First-Time Home Buyers And What They Mean
With rising housing prices, it is becoming more and more tough for first-time home buyers to get anywhere near their dream home in Canada soon. The government of Canada is trying to make housing accessible and affordable to all and hence some new mortgage rules have been put in place. But how do they help? Let's see:
First Home Savings Account To Be Tax-Free
The Tax-Free First Home Savings Account, which is meant to help the first-time home buyers, is somewhat like a cross between Registered Retirement Savings Plan (RRSP) and Tax-Free Savings Account (TFSA). There is an annual contribution limit of $40,000, along with tax-deductible contributions, and the power to make a withdrawal when purchasing a first home, in a tax-free manner. It provides more flexibility and may even help you save more money for making down payments, without the hassle of taxes.
Extension of Incentives and Greater Flexibility
The Canadian government has extended the first-time home buyer incentive till March 2025. It is also great as it empowers first-time buyers to make a minimum down payment of 5 or 10% of purchase price of their new house. By sharing housing costs with the Canadian government, such buyers get access to affordable housing due to lowered borrowing funds. But before you get into any of this, we advise you to take the mortgage stress test to know where you stand vis-a-vis mortgage eligibility.
Double Tax Credit for Home-Buyers
Those who buy a house on or after Jan 1, 2022, can avail the added advantage of first-time home buyers tax credit being doubled. Moreover, this is a non-refundable tax credit which will be doubled from $5,000 to $10,000. This means homeowners will get up to $1,500 extra support. This certainly is good news for those for whom every penny matters and first-time home buyers are at a massive advantage.
Along with the above rules, there are yet some other mortgage incentives have been added to aid the first-time home buyers. These include the launch of a New Housing Accelerator Fund, new rules aimed at taxing property flippers, backing of Rent-to-Own projects, government investments in Housing for Indigenous Communities, government investments in Housing for Indigenous Communities, Multigenerational Home Renovation Tax Credit, doubling of the Home Accessibility Tax Credit, steps towards Home Buyers’ Bill of Rights, and long-Term supports to end homelessness among many others.
All you need to do as a first-time home buyer is to avail these incentives and take that first step towards your first home. It sure is a massive investment for you but with improved rules and regulations, and better affordability, the process has become a lot easier.
If you are a first-time home buyer looking for support or help with laws, or feel stuck or lost at any stage of home-buying, do contact us at LendX Financial in Brampton, serving entire GTA. We are happy to help.