First-time buyers of a new property now benefit from a mortgage advantage.

Indeed, the Canadian federal government recently announced a key measure in Budget 2024 to make it easier for young Canadians to own their home. Starting August 1, 2024, first-time buyers of newly constructed homes will be able to benefit from an extended amortization period that will cover a total term of 30 years, which is designed to ease the financial burden associated with purchasing a home while encouraging new home construction.

Details of the new measure

The measure applies exclusively to first-time buyers of newly built properties. The restriction is designed to stimulate the supply of new homes while avoiding excessive demand that could unbalance the market. Eligible borrowers will thus be able to benefit from an additional five years to repay their loan, thereby reducing the financial pressure of monthly payments.

Eligibility criteria

To benefit from this extended amortization period, buyers must meet the following criteria:

1. First-time homebuyer : One of the borrowers must be a first-time homebuyer, meaning someone who has never purchased a home before or who has not occupied a home that they or their spouse owned in the past four years. Individuals who have recently been through a separation or divorce may also be eligible, based on the Canada Revenue Agency’s criteria for the Home Buyers’ Plan.
2. Newly Built Property : The property must be completely new and have never been occupied for residential purposes. This includes newly built condominiums that may have been temporarily occupied.

Implementation and impact

The new measure applies to mortgage insurance applications submitted on or after August 1, 2024. Financial institutions will begin offering these 30-year amortization mortgages as of that date. It is important to note that this measure only applies to high-ratio mortgages, i.e., when the loan amount exceeds 80% of the property price, for owner-occupied homes.

Conclusion

This federal government initiative is a direct response to the challenges that young Canadians face in accessing homeownership. By extending the amortization period, the government is offering a concrete solution to ease monthly payments and make homeownership more accessible. This measure, while encouraging the construction of new homes, represents an important step towards greater fairness in the real estate market for future generations. Do you have any questions about this new measure? Do not hesitate to contact Gail Meili, Saint-Lazare and Hudson real estate broker, for more information and advice tailored to your situation.

For more information or to contact Gail Meili, Saint-Lazare and Hudson real estate broker, gailmeili@icloud.com or call 514 969-4134.