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30-year amortization

Ottawa’s 30-Year Mortgage Expansion: Key Impacts for Homebuyers

The recent announcement of expanded 30-year amortization and an increased insured mortgage cap in Ottawa has stirred considerable discussion in the real estate market. Set to take effect on December 15, 2024, these changes promise to reshape the landscape for potential homebuyers. Let’s examine the potential impacts of these new mortgage rules.

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First-Time Buyer Federal Housing Programs

First-time home buyers:

  • First-Time Home Buyer Incentive (FTHBI): Provides a shared equity mortgage with the Government of Canada to help first-time home buyers lower their monthly mortgage payments without increasing their down payment.
  • First-Time Home Buyers’ Tax Credit (HBTC): Budget 2022 proposed increasing the amount used to calculate the First-Time Home Buyers’ Tax Credit to $10,000 (from $5,000), which would provide a tax credit of up to $1,500 to eligible home buyers. This amendment applies to the 2022 and subsequent taxation years.
  • Home Buyers’ Plan (HBP): Allows eligible home buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to put towards the down payment of their first home.
  • Tax-Free First Home Savings Account (FHSA): Designed to give first-time home buyers the ability to save $40,000 on a tax-free basis with an annual contribution limit of $8,000. The government is working with financial institutions to have the infrastructure in place for individuals to be able to open an FHSA and start contributing at some point in 2023.

Dan & Ottawa Urban Realty in the News

Two recent Ottawa Citizen stories included comments from Dan Moloughney, Broker of Record and owner of Ottawa Urban Realty:

How to decide if the city, the suburbs or the rural life is right for you
Downtown? Kanata? Osgoode? This guide will help steer your search if you’re settling down in Ottawa

5 tips to help you buy your first home in the nation’s capital
Whether you’re a born-and-raised Ottawan, or are moving to Ottawa from another province, these tips from Ottawa realtors can help start the process

Buying in Ottawa Urban Neighbourhoods

Are you considering a move to or within Ottawa? Is an Ottawa Urban Neighbourhood being considered? Want to walk to work or school? Ottawa used to be a small city with a well defined core of urban neighbourhoods. Certainly Centretown, the Golden Triangle, the Glebe, Lowertown and Sandy Hill would have been considered “urban” for the last 60 to 100 plus years.

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First-Time Home Buyer Incentive UPDATE

 

According to CMHC-SCHL the Government of Canada just released several tools and resources to help with the First-Time Home Buyer Incentive program.

These include:

1/ the product highlight sheet (PDF)

2/ the online calculator on the government website

3/ all about the program on the government website

4/ all about the process on an awkward government website, that may or may not work for you

 

Possibly, the most important question is how the “loan” is paid back. According to a quick review of provided info, you can pay back the full loan if you want at any time. If you sell the home you need to pay back as a percentage of the sale price.

For example, you “borrowed” 10% of value of a new home. When you sell you must pay the government of Canada 10% of the sale price, whether value went up or down.

For resale (not new) homes the max is 5% of value.

Why not borrow the full amount you can, and then if value goes up a lot, pay off the full loan just prior to selling? Not yet clear how this would be handled.

I expect there will be MANY more questions about the process and requirements. It really doesn’t seem like the government thought this program through…but it does line up nicely for a fall election.

There is no doubt that first time buyers are finding it MUCH harder to buy a home in the Ottawa market. Hopefully this program will help in a meaningful way.

First Steps to Home Buying

How to buy the BEST possible home

 

Buying a home may initially seem daunting but following these steps can help to simplify the process.  I see many first time buyers unsure of how to begin searching for a home and these are the tips I give them.

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