Ottawa changing RRSP Home Buyers’ Plan, some mortgage amortization rules
The federal government has announced a series of measures to make it easier for first-time buyers to break into the housing market with changes to the Home Buyers’ Plan and amortizations on some mortgages.
Finance Minister Chrystia Freeland unveiled the changes Thursday morning, the latest housing-focused announcement ahead of her tabling the 2024 federal budget on April 16.
“Faced with a shortage of housing options and increasingly high rents and home prices, many younger Canadians feel that the dream of homeownership is just that, a dream,” Freeland said in Toronto.
“Our government is changing that. We want home ownership to be a reality for younger Canadians.”
Among the changes are an increase in the withdrawal limits under the Home Buyers’ Plan, which allows Canadians to take money out of a registered retirement savings plan (RRSP) to put towards the down payment for a first home.
As of April 16, homebuyers would be able to draw down as much as $60,000, up from the previous limit of $35,000, from their RRSP towards a home purchase.
The Home Buyers‘ Plan allows individuals to make the withdrawals tax-free from their RRSP as long as it’s paid back into the account over the course of 15 years.
Freeland said Ottawa is now giving Canadians five years before they have to start paying back that amount, up from two years. The extension applies to anyone who makes or has made a withdrawal from the Home Buyers’ Plan between 2022 and 2025.
Ottawa is also allowing amortizations on some mortgages to stretch up to 30 years in a bid to make monthly payments more affordable for first-time buyers.
As of Aug. 1, first-time homebuyers purchasing a newly built property can get an insured mortgage with a 30-year amortization – the time
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