Financial Perspective : New developments for first-home buyers
If you’re planning to buy your first home, you should take note of the recently announced changes to the Home Buyers’ Plan (HBP) and mortgage lending rules.
Among the many announcements included in the budget tabled in April 2024 by federal Finance Minister, Chrystia Freeland, two are of particular interest for future first-home buyers.
Let’s take a look at them.
The HBP goes up to $60,000
The Home Buyers’ Plan (HBP) allows eligible individuals to make tax-free registered retirement savings plan (RRSP) withdrawals for use as a down payment on a first home. It’s a little like getting an interest-free loan from your own RRSP, to be repaid over the next 15 years.
What has changed with the latest budget? Previously, the maximum amount an individual could withdraw under the HBP was $35,000, but this has been increased to $60,000. This means that a couple with enough savings in their RRSPs could now withdraw a grand total of $120,000, i.e., $50,000 more than before. As well, the clock only starts running on the 15-year repayment time limit after a grace period. In the latest budget, this grace period, which is normally two years, has been increased to five years if the withdrawal falls between January 1, 2022 and December 31, 2025.