On April 11th, the federal government announced new measures intended to assist homeowners with rising costs, and first-time buyers to get into the market. 

Those struggling with mortgage payments may soon find relief. Eligible homeowners will be able to extend their mortgages to a 35 year-amortization (the time needed to repay the loan) to make their monthly payments more manageable. It is unclear what criteria homeowners would need to meet to qualify for such relief. While this will enable some to keep their homes by lowering their monthly payments, it may also mean an increase in interest payments over time. 

The new rules will also allow for 30-year amortization periods on insured mortgages (those with less than a 20% down payment) on new construction only. The current cap for insured mortgages is 25 years. Stretching out amortizations to 30 years from the traditional 25 years will reduce the magnitude of monthly payments, but again will mean more interest payments over time. As most builders in Ontario require deposits totalling 20%, this policy change may be less helpful to first-time buyers purchasing pre-construction homes here.

And first-time home buyers now have extra incentive to contribute to their RRSPs after the federal government announced it will increase the home buyers’ plan (HBP) withdrawal limit to $60,000 from $35,000 as of April 16th, 2024. People who have withdrawn from the HBP between Jan. 1, 2022, and Dec. 31, 2025, will see their repayment grace period extended to five years from two “so they can focus on their mortgage payments and getting ahead.”