The housing market has recently introduced new rules that present great opportunities for homebuyers. Here’s a breakdown of the latest updates and how you can benefit:
1. Expanded Amortizations for First-Time Buyers
Starting December 15, first-time homebuyers can access 30-year amortizations, offering two major benefits:
- Lower Income Requirement: A longer amortization means buyers need less income to qualify for a mortgage, opening the door to more clients.
- Reduced Monthly Payments: Extending payments over 30 years decreases monthly costs. For a $600,000 home, this could mean about $250 less per month.
2. Higher Insured Mortgage Cap ($1.5 Million)
For those with high incomes but smaller savings, the new mortgage cap helps:
- Lower Down Payments: Buyers of a $1.4 million home can now put down about $115,000 instead of $280,000, saving $165,000 upfront.
- Right-Sizers Benefit: Those downsizing can hold onto more cash for retirement by putting down less on smaller homes.
3. Switching Lenders at Renewal
Switching lenders without a stress test is now possible, thanks to the Canadian Mortgage Charter. Encourage insured mortgage holders to explore this option for better rates and terms, potentially saving thousands on interest.
4. Tax-Efficient Savings Strategies
Two key savings methods can make a big impact:
- RRSP Withdrawal Limit Increase: Clients can now withdraw up to $60,000 (previously $35,000) from their RRSP for a down payment.
- First-Time Home Saver Account: Clients can save $8,000 a year, reducing taxable income and building tax-free savings toward their home.
By understanding these changes, you can help clients make smarter decisions and take advantage of new opportunities in the housing market.