Some new changes to Canada’s mortgage rules could open up some great opportunities for you. Whether you’re buying a home, considering refinancing, or approaching your mortgage renewal, these changes may positively impact your mortgage options. 

Here’s a quick breakdown of the key updates and what they could mean for you:

1. Renewals – Stress Test Dropped for Uninsured Mortgage Switches
If you’re renewing your uninsured mortgage with the same amortization schedule, loan amount, and at least 20% equity, the stress test will no longer apply to federally regulated lenders as of November 21^st. This means you can potentially change lenders and qualify based on the contract rate, not the higher stress-tested rate, giving you more flexibility to shop for competitive rates — potentially lowering your monthly payments and securing better terms.

2. Buying A Home – Changes to Insured Mortgages
Beginning December 15th, buyers will be able to qualify for an insured mortgage up to $1.5 million, an increase from $1 million. Additionally, first-time buyers and those purchasing newly built homes will now have the option of a 30-year amortization. This means you can enter the market with a smaller down payment and increased buying power — bringing you closer to your dream home.

3. Refinancing – Unlock Up to 90% of Your Property’s Value
Starting January 15, 2025, homeowners can access up to 90% of their home’s value through refinancing to fund the creation of rental units (like basement apartments or laneway houses). With this program, you can refinance based on the enhanced value of your property, including the new units, as long as the total property value doesn’t exceed $2 million once the upgrades are complete. With rental demand on the rise, this is a great opportunity to maximize the value of your property and generate extra income.

While more details are to come, these rule changes are set to provide greater flexibility and new possibilities for Canadian homeowners.

The Government of Canada has just announced new mortgage reforms that could reshape the housing landscape. In a major move that aims to make homeownership more accessible to Canadians.

The new reforms introduced include:

• Increasing the Insured-Mortgage Cap: Effective December 15, 2024, the cap for insured mortgages will rise from $1 million to $1.5 million. This adjustment, the first since 2012, better reflects today’s housing market and will allow more Canadians to qualify for a mortgage with a down payment of less than 20%.
• Expanding 30-Year Amortization: First-time homebuyers and buyers of new builds will now be eligible for 30-year mortgage amortizations on insured mortgages, previously capped at 25-years, starting December 15, 2024. This extension aims to reduce monthly mortgage costs and incentivize new housing construction to tackle the ongoing housing shortage.

These reforms build on initiatives from earlier this year, including:

• RRSP Home Buyer’s Plan: The limit was increased from $35,000 to $60,000 to give Canadians more flexibility in leveraging their savings for home purchases.
• Permanent Amortization Relief: This measure provides long-term support for existing homeowners facing rising mortgage payments.

While more details are to come, these initiatives intend to help shape a new path for Canadians to achieve homeownership. Whether you’re a first-time buyer, considering a move, or preparing for a mortgage renewal, now is a great time to explore your options.

The Newly Built Home Exemption reduces or eliminates the amount of property transfer tax you pay when you purchase a newly built home.
To qualify, the property must be newly built.

The buyer must be:

•  an individual
•  a Canadian citizen or permanent resident 
•  move into the property within 92 days after registration
•  reside in the property for at least 1 year

and the property must:

•  be located in B.C.
•  only be used as your principal residence
•  have a fair market value of $1,100,000 or less
•  be 0.5 hectares (1.24 acres) or smaller

You may qualify for a partial exemption, if the property:

•  has a fair market value greater than $1,100,000 and less than $1,150,000

First Time Home Buyers may qualify for exemption if:

•  you are a Canadian Citizen, or a permanent resident as determined by Immigration Canada.
•  you have lived in British Columbia for 12 consecutive months immediately before the date you register the property, or you have filed 2 income tax returns as a BC resident during the 6 years before the date you register the property,
•  you have never owned an interest in a principal residence anywhere in the world ever.
•  you have never received a first time home buyers’ exemption or refund.
•  the land is 0.5 hectares (1.24 acres) or smaller.
•  the property will be used as principal residence.

If the fair market value, excluding tax, is less than $500,000, a full exemption applies.
If the fair market value is between $500,000 and $835,000 an exemption of $8,000 applies.
If the fair market value is between $835,000 and $860,000 a sliding scale exemption applies.
If the fair market value is over $860,000 there is no exemption

Example of partial exemption, assume purchase price is $845,000
PTT = $200,000 x 1% + ($845,000 – $200,000) x 2% = $14,900
PTT Exemption = ($860,000 – $845,000) / ($860,000 – $835,000) = 60%
Purchaser pays = $14,900 – (8,000 x 60%) = $10,100

The FTHBI program will not be available as of March 21st. Please see the link below for more details.

Link: https://www.canadianmortgagetrends.com/2024/03/cmhc-announces-an-end-to-its-first-time-home-buyer-incentive/

The changes to the HBP rules in respect of first-time home buyers announced in Budget 2019

To provide first-time home buyers with greater access to their RRSP savings to purchase or build a home, Budget 2019 proposes to increase the Home Buyers’ Plan withdrawal limit to $35,000. This would be available for withdrawals made after March 19, 2019.

For HBP withdrawals made after 2019, the budget proposes to permit an individual who would not otherwise be considered a first-time home buyer under the HBP at the time of the withdrawal to be considered a first-time home buyer if:

• at the time of the withdrawal, the individual:
  • is living separate and apart from their spouse or common-law partner because of a breakdown of their marriage or common-law partnership,
  • has been living separate and apart from their spouse or common-law partner for a period of at least 90 days, and
  • began living separate and apart from their spouse or common-law partner in the year of the withdrawal or in the four preceding calendar years; and
• where the individual owns and occupies a home that was the individual’s principal place of residence at the time of the withdrawal, either:
  • that home is not the qualifying home that the individual intends to acquire with the funds obtained from the withdrawal, and the individual sells the home (or disposes of their interest or right in the home to their separated spouse or common-law partner) no later than the end of the second calendar year after the year of the withdrawal, or
  • the individual otherwise acquires the interest or right of their separated spouse or common-law partner in the home (e.g., where the home is the matrimonial home) no earlier than 30 days before the withdrawal and no later than September 30^thof the year following the withdrawal; and
• if the individual has a new spouse or common-law partner at the time of the withdrawal, the new spouse or common-law partner does not own and occupy a home that is the individual’s principal place of residence.

Example 1:

Morgan and Kelly separated on February 1, 2019 because of the breakdown of their marriage. Morgan and Kelly occupied the matrimonial home, which Morgan owns, up until the time of separation. On June 1, 2020, Kelly, who lives on her own outside of the matrimonial home, wishes to make an HBP withdrawal to build a new qualifying home.

Under the HBP rules, Kelly would not be considered a first-time home buyer on June 1, 2020. This is because, during the four-year period, the matrimonial home was Morgan’s owner-occupied home, which Kelly lived in during their marriage.

However, under the proposed changes to the HBP rules, Kelly would be deemed to be a first-time home buyer on June 1, 2020 because, at that time, she:

• lives separate and apart from Morgan as a result of the breakdown of their marriage;
• has been living separate and apart from Morgan for at least 90 days; and
• began living separate and apart from Morgan in the year preceding the withdrawal.

Provided Kelly satisfies all other conditions under the HBP rules on June 1, 2020, she can make the HBP withdrawal under the proposed changes.