The Liberal Party of Canada has gone for the Millennial vote in this election year with 2019 Budget measures that it says will help make housing more affordable for young people.

Its key new measure is the First Time Home Buyer Incentive – an interest-free shared mortgage with the Canada Mortgage and Housing Corporation. This billion-dollar-plus initiative offers funding of 10 per cent of the purchase price of new-build homes and five per cent of the purchase of resale homes.

The budget document said that this loan, which is only for first-time homebuyers with a household income under $120,000 a year, could reduce monthly mortgage payments up to $228 per month on a $400,000 new-build home.

It said, “For example, if a borrower purchases a new $400,000 home with a 5 per cent down payment and a 10 per cent CMHC shared equity mortgage ($40,000), the borrower’s total mortgage size would be reduced from $380,000 to $340,000, reducing the borrower’s monthly mortgage costs by as much as $228 per month.”

The measure would effectively be an interest-free loan that is repayable once the main mortgage is paid off or the home is sold, however many of the program’s key details were missing from the budget document and will be announced later.

Increased Home Buyer’s Plan allowance

The budget also increases the $25,000 limit on the Home Buyers’ Plan, which allows first time homebuyers to borrow from their Registered Retirement Savings Plan to purchase a new home. The new limit will be $35,000, or $70,000 for a couple.

Are you a first-time homebuyer? Call Erikson Law Firm and we’ll guide you through this process!

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