Government to Extend Amortization Periods for First-Time Homebuyers

Government to Extend Amortization Periods for First-Time Homebuyers

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The Canadian federal government has recently revealed significant changes aimed at easing the path to homeownership for first-time buyers amidst soaring housing prices. Finance Minister Chrystia Freeland announced these measures during a press conference in Toronto, emphasizing the government’s commitment to making homeownership achievable for younger Canadians.

Starting August 1, first-time homebuyers purchasing newly built homes will be eligible for 30-year amortization periods on insured mortgages. This extension offers buyers increased flexibility in managing their mortgage payments, potentially reducing financial strain and making homeownership more attainable.

Additionally, the government has raised the maximum RRSP (Registered Retirement Savings Plans) withdrawal limit for first-time buyers to $60,000, effective April 16. This adjustment aims to provide prospective homebuyers with greater access to funds for down payments, facilitating their entry into the housing market.

Furthermore, the repayment period for RRSP withdrawals made between January 1, 2022, and December 31, 2025, has been extended to five years, offering individuals more time to repay the borrowed amount. These changes reflect the government’s recognition of the challenges faced by younger Canadians in achieving homeownership amidst rising rents and housing prices.

The announcement coincides with a series of housing-related initiatives by the federal government, including the introduction of over 750,000 First Home Savings Accounts (FHSAs) across Canada. FHSAs allow Canadians to save up to $40,000 towards a home down payment in a tax-free manner, further supporting the goal of making homeownership more accessible.

Despite discontinuing the First Time Home Buyer Incentive, the government remains focused on implementing effective measures to address the housing affordability crisis.

Prime Minister Justin Trudeau has also unveiled plans for a new $1.5-billion “Canada Rental Protection Fund” to tackle affordability challenges faced by renters nationwide.

With these initiatives, the Canadian government is taking proactive steps to address the pressing issue of housing affordability, signaling a concerted effort to support first-time homebuyers and renters alike.