April 2024 has been an active month for news impacting mortgage borrowers! The 2024 federal budget contained some benefits for first-time homebuyers, which is a step in the right direction. In addition, the federal government announced big plans the mortgage industry has been requesting for several years around Canada Revenue Agency (CRA) borrower income verification to help ward off mortgage fraud.
Two main perks in the budget for first-time homebuyers includes enhancements to the registered retirement savings plan (RRSP) Home Buyers’ Plan (HBP) and extended amortizations.
Increases to Home Buyer’s Plan
Effective April 16th, the maximum RRSP HBP withdrawal increased to $60,000 per person – up from $35,000. This means that, if borrowers are fortunate enough to have a lot of RRSP savings, they can borrow quite a bit from their accounts tax-free to put towards a first home.
In addition, for RRSP withdrawals made as part of the HBP between January 1st, 2022 and December 31st, 2025, the repayment grace period increases to five years from two.
Longer amortization period for new construction
As of August 1st, first-time homebuyers could qualify for a 30-year amortization insured mortgage (an increase from the current 25 years) if purchasing a newly-built home. Extending the amortization limit by five years for first-time homebuyers purchasing new builds will hopefully enable more Canadians to afford a mortgage and encourage new supply.
New mortgage fraud measures
The Minister of Housing, Infrastructure and Communities, Sean Fraser, announced a collaboration with CRA around digital income verification measures in order to combat mortgage fraud. This is huge news as mortgage fraud has continued to grow from year to year and cost Canadians a significant amount of money.
Have questions about how you may be able to benefit from these changes? Answers are a call or email away!