October 2024 - Michael Greene Dominion Lending Centres

On Tuesday of last week, the federal government announced some new housing measures that are aimed at helping homeowners, especially those looking to add a little extra income with secondary suites, while also tackling some of the bigger housing challenges Canada is facing. We’re talking new taxes, refinancing options, and plans to repurpose underused federal properties. So, let’s dive into what all this means for homeowners like you.

Easier Refinancing for Secondary Suites

If you’ve ever thought about turning that empty basement or unused garage into a rental suite, this one’s for you. One of the most exciting changes is the recent municipal zoning reform that makes it easier to refinance your mortgage to fund these kinds of projects. This is made possible through Housing Accelerator Fund agreements.

Here’s the deal: you can now access up to 90% of your home’s value, including the value of that future rental suite, through refinancing. This means more cash in hand to get your renovations going!

On top of that, you can now stretch the loan out over 30 years. Longer amortization = lower monthly payments, which is always a win. Oh, and if you’re worried about mortgage insurance limits holding you back, don’t be. The government has bumped the mortgage insurance limit up to $2 million, so homeowners in pricier markets won’t get left behind.

As Deputy Prime Minister Chrystia Freeland said, “We’ve got to use every tool in the box to make housing more affordable for Canadians.” And this is definitely one of those tools!

Tax on Vacant Land to Spur Development

Now, onto the vacant land tax. If you’re sitting on some unused land, the government is about to give you a nudge to do something with it. The idea here is simple: introduce a tax on vacant land to push landowners into developing residential properties, instead of just letting the land sit there.

The feds are working with local governments to figure out how this could work in different areas. So, don’t be surprised if you start hearing more about it from your local city hall.

To take advantage, Canadians can participate in consultations with municipalities and the federal government to help shape the implementation of vacant land taxes, ensuring fair regulations while incentivizing new development in local communities.

Repurposing Federal Properties for Housing

Last but not least, the government is making more federal properties available for housing development. We’re talking about 14 new properties, from places like Ottawa to Cape Breton. These properties will join the Canada Public Land Bank, which already has 70 spots ready to be turned into homes.

Public Services and Procurement Minister Jean-Yves Duclos summed it up nicely: “We’re unlocking public lands for housing at a pace we haven’t seen in generations.” Translation: they’re serious about tackling the housing crisis and creating more affordable housing options across the country.

In conclusion, the federal government’s new housing measures represent a significant step towards addressing Canada’s housing challenges. By making it easier for homeowners to build secondary suites, taxing vacant land to encourage development, and unlocking federal properties for housing, these initiatives aim to increase housing supply, improve affordability, and create stronger communities. For homeowners, these changes provide new opportunities to maximize their property’s potential, generate additional income, and contribute to the solution for Canada’s housing crisis. Together, these measures reflect a proactive approach to making housing more accessible and affordable for Canadians, now and in the future.

As we continue to navigate this unpredictable journey of interest rates, our commitment to your financial success remains steadfast. Whether rates rise or fall, the Bank of Canada rate cut impact on mortgages will influence your decisions. Partnering with a knowledgeable mortgage broker like Mortgage With Mike will empower you to make informed decisions in this evolving landscape. Your mortgage is a fundamental aspect of your financial future, and it’s essential to ensure it’s built on solid ground.

Get in touch with us today to discover how we can assist you on your journey to homeownership.

These mortgage reforms, touted as the boldest in decades, aim to unlock homeownership for all Canadian first-time homebuyers and buyers of new builds by address housing affordability and ease the path to securing to homeownership. In an effort to making it easier to qualify for a mortgage, significant reforms are being introduced across Canada, specifically targeting first-time homebuyers and buyers of newly constructed properties. These mortgage reforms represent a transformative shift and aim to expand access to mortgage options, increase affordability, and stimulate the housing market.

New Mortgage Reforms is Expanding Eligibility from 25- Year to 30-Year Mortgage Amortization

A major highlight of these mortgage reforms is the expansion of 30-year mortgage amortizations for all first-time homebuyers and those purchasing newly built homes. This measure will provide more flexibility for borrowers who need high loan-to-value mortgage insurance. Under the current rules the first-time buyers and buyers of new builds applying for an insured mortgage have to qualify using 25-year amortization.

To qualify under the new reform, borrowers must meet the following criteria:

The total loan-to-value ratio must be 80% or more.
The borrower must either be:
1. A first-time homebuyer, or
2. Purchasing a newly constructed home.

Definition of a First-Time Homebuyer

Under this reform, a first-time homebuyer is defined as someone who meets at least one of these conditions:

The borrower has never purchased a home before.
In the last four years, the borrower has not lived in a home that they or their spouse/common-law partner owned.
The borrower has recently experienced a breakdown in a marriage or common-law partnership, similar to the rules used in the Canada Revenue Agency’s Home Buyers’ Plan.

Definition of a Newly Constructed Home

A property will be classified as a newly constructed home if it has not been previously occupied for residential purposes. Importantly, newly constructed condominiums with an interim occupancy period will still qualify.

The New Mortgage Reforms will Raise the Insured Mortgage Price Cap From $1 Million to $1.5 Million

In response to the rising cost of homes in Canada, the price cap for insured mortgages will increase from $1 million to $1.5 million. This change applies to borrowers requiring high loan-to-value mortgage insurance and is expected to benefit buyers in competitive housing markets.

To qualify for this new price cap, borrowers must adhere to these conditions:

The loan-to-value ratio must be 80% or higher.
The residential property’s value must be less than $1.5 million.
Down payment requirements are structured as follows:
- 5% on the portion of the purchase price up to $500,000.
- 10% on the portion between $500,000 and $1.5 million.

When Will the Mortgage Reform Measures Take Effect?

These groundbreaking reforms will take effect for mortgage insurance applications submitted to mortgage insurers like CMHC on or after December 15, 2024. Importantly, these measures will only apply to high loan-to-value mortgages on homes occupied by the borrower or a close family member. All other existing eligibility criteria for government-backed mortgage insurance will remain unchanged.

Advocacy for Housing Affordability

As these new measures roll out, organizations such as Mortgage Professionals Canada (MPC) will continue advocating for policies that make homeownership more attainable. By supporting reforms like these, MPC aims to put more money back into Canadians’ pockets, improve housing affordability and accessibility, and maintain high standards within the mortgage industry.

This reform package marks the boldest effort in decades to unlock homeownership for all Canadian first-time homebuyers and buyers of new builds, and is expected to have a lasting impact on Canada’s housing market.

Easing Mortgage Accessibility for Canadian First-Time Homebuyers

With skyrocketing home prices and stringent lending rules, many first-time buyers have been left on the sidelines. However, the latest reforms bring a fresh perspective, designed specifically to unlock opportunities for this demographic. By expanding qualification criteria and reducing the stress test burden, these changes aim to boost accessibility to mortgage financing, especially for those entering the housing market for the first time.

Unlocking Homeownership for Buyers of New Builds

One of the standout features of the recent reforms is the attention given to buyers of new construction homes. Previously, buyers of new builds faced unique challenges in financing, often tied to the unpredictability of construction timelines. Under the new regulations, buyers of new homes will have greater flexibility in mortgage terms and pre-approvals, making it easier to secure financing without the fear of delays or unexpected costs.

Long-Term Impacts of the Bold Mortgage Reforms

These reforms are poised to have long-lasting effects on the Canadian housing market, particularly in urban areas where demand for affordable housing is high. Check out Wowa for in-dept stats. By simplifying mortgage qualification and offering more flexible financing options, the government hopes to stimulate both supply and demand, leading to increased construction of new homes while helping first-time homebuyers overcome financial barriers.

A Path Forward for All Canadian Buyers

Whether you are a first-time homebuyer or looking to purchase a newly built home, these bold mortgage reforms promise to unlock new possibilities. With more accessible mortgage options and a clear focus on affordability, Canada’s housing market is on the verge of becoming more inclusive for all buyers.

Final Thoughts: Seizing the Opportunity for Homeownership

The boldest mortgage reforms in decades have created a golden opportunity for Canadian first-time homebuyers and buyers of new builds to finally achieve their homeownership dreams. These changes not only make mortgages more accessible but also pave the way for more affordable housing options across the country.

If you’ve been waiting for the right moment to buy your first home or secure financing for a new build, now is the time to act. Don’t let this opportunity pass you by!

Ready to Unlock Your Dream Home?

Contact us today to learn how these bold new mortgage reforms can help you take the next step toward homeownership. Whether you’re a first-time buyer or interested in a new build, Mortgage with Mike is here to guide you through the process.

Get in touch with us today and unlock your path to homeownership!

Michael Greene

Mortgage Broker

Month: October 2024

Federal Housing Measures Support Secondary Suites, Vacant Land Taxes, and More Homes on Public Lands