First time home buyers are finally catching a break! The government had decided to roll out the red carpet in order to facilitate access to property with interesting measures, including the FHSAs. So, fasten your seat belts and we will explain everything in detail
First time home buyers ? 2 possibilities to reach your down payment goal
1- Tax-free savings account: FHSAs and first time home buyers
Last year in 2023, our leaders introduced the Tax-Free Savings Account for the Purchase of a First Property (FHSAs). This measure offers Canadians the opportunity to invest up to $40,000 in order to acquire their first home. Similar to an RRSP, funds deposited in this account are tax deductible. As with a traditional savings account, withdrawals made for the purchase of a first residence do not have to be subject to tax. In just one year, more than 750,000 citizens have already joined FHSAs. This clearly demonstrates the obvious interest of younger generations to own a first home.
The FHSAs can also become an excellent opportunity for parents with the financial means to delegate part of their assets during their lifetime to their children. In fact, parents can contribute to their child’s FHSAs from the age of 18. Consequently, they will be able to benefit from an amount of $40,000, plus interest accumulated tax-free, as a down payment for their first home!
2- Home Buyer’s Plan (HBP): 3-year extension for refund and increase in the available withdrawal limit
In addition, an innovative measure supports the desire to acquire property. The Home Buyers’ Plan withdrawal limit will increase from $35,000 to $60,000 starting April 16, 2024! This strategy, combined with FHSAs, offers young Canadians more resources to make the necessary down payment to acquire a first home. Advantageously, the reimbursement period for withdrawals from the Home Buyers’ Scheme is extended by three years! From now on, withdrawals made between January 1, 2022 and December 31, 2025 will benefit from a 5-year grace period before being reimbursed. This will have the effect of reducing first time home buyers’ financial obligations with regards to their mortgage and other related costs.
Canadian mortgage chart and first time home buyers
Starting August 1st , an interesting opportunity will be offered to new first time home buyers. The government will offer a reimbursement period spread over 30 years for their loan. This additional spread will offer an advantageous alternative to the usual 25 years, allowing substantial monthly savings. This measure promises to bring comfort and happiness to many young homeowners in view of their new home.
Mortgage renewal coming up?
The strict rules surrounding mortgages in Canada are surprisingly transformed into a pleasant surprise for homeowners. In fact, an extension of the current loaning period will be possible, without additional cost or complications! Consider a homeowner with a 25-year loan, juggling bills and a rising cost of living. Thanks to this new provision, this financial complication can turn into a permanent spread solution up to 35 years. As a result of the lower personalized monthly payments, owners will be able to see their current quality of life improve!
