In the Housing section of Canada's federal budget released on March 19, 2019, the greatest emphasis is on the affordability of housing for first time home buyers. First, the straight-forward news: effective this year, the Home Buyers' Plan that allows Canadians to withdraw funds from their RRSP to buy a home will be increased to a limit of $35,000. If you've been diligent in using this saving product, it could work to your advantage when it's time for your down payment.
Reducing Mortgage Sizes
The bigger announcement is the creation of a new program called the First-Time Home Buyer Incentive. While buyers would still be required to come up with the minimum down payment (5% of the purchase price) on their own, CMHC would offer qualified buyers a 'shared equity mortgage' that would reduce the amount they need to borrow for their mortgage. The CMHC amount would be 5% of the purchase price for an existing home (resale) or 10% of the purchase price for a newly built home.
Although the full details of this Incentive have not yet been released, the government has stated that there would be an income cap of $120,000 per household, and that the purchase price of the property cannot exceed four times the buyer's annual income – or $480,000. The government expects 100,000 first time home buyers to benefit.
What Does This Mean In Victoria?
The average assessed value of properties in Victoria and the rest of the CRD are well above the cap for the newly announced Incentive. That doesn't mean you won't find a property that fits the CMHC criteria; however, it will be significantly more difficult in markets that have already experienced high housing prices.
While there is no immediate relief to housing affordability in our province, earlier in the week the Federal Department of Finance also announced an expert panel with the Government of BC on the Future of Housing Supply and Affordability with the goal of identifying and evaluating measures that could build on recent initiatives to increase the supply of housing in British Columbia to meet demand.
If you're a first time home buyer and you're ready to explore your mortgage options, the Auxilium Team is here to work with you. We've helped many clients to buy their first house, using the existing government programs and incentives when they fit. Contact us for a free consultation with one of our brokers: call 250-590-6520 (toll-free 1-855-590-6520) or visit us at 307 Goldstream Avenue during regular business hours. We can also arrange an appointment evenings or weekends to work with you.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.