First-Time Home Buyers, Have You Lost Out?
This article was written in collaboration between Christina A. DeMarinis and Mary Da Rosa. Enjoy!
Recently, both of us individually explored the Canada Mortgage and Housing Corporation’s (CMHC) decision to discontinue its First-Time Home Buyer's Incentive as of March 21, 2024. Today, united in purpose, we stand ready to provide you, as first-time home buyers, with our collective insights. Our goal? To offer you a thorough understanding of the impact and actionable steps necessary to lead you to your dream home!
Let's delve into the program. Launched in 2019, this initiative aimed to support first-time homebuyers through a shared-equity model. The government chipped in 5% to 10% towards the down payment, but here's the twist: they also received a portion of any future increase or decrease in the home's value. While this arrangement may have appeared advantageous initially, particularly amidst the recent surge in home prices, it often tilted the scales in favor of the government rather than the buyers.
Another pivotal aspect of this initiative was its repayment structure. Rather than burdening purchasers with monthly payments, they reimbursed the loan over time, either after 25 years or upon property sale, whichever occurred first. The repayment amount was determined based on the current fair market value, independently assessed by CMHC.
Now, let's confront the challenges. Despite its potential benefits, the program encountered criticism and low participation from the outset. Although the government aspired to aid 100,000 first-time homebuyers, by 2022, only 16,000 applications had been received.
The program encountered various obstacles, including its initial maximum purchase price of $505,000, later increased to $722,000 for buyers in major cities such as Toronto, Vancouver, and Victoria. Despite these adjustments, many remained excluded due to prevailing housing market dynamics characterized by high purchase prices and low mortgage rates from 2020 to 2022. In numerous instances, opting for a low-rate mortgage proved more enticing than utilizing the incentive.
Meanwhile, the introduction of the First-Home Savings Account in 2023 attracted significant interest, with 500,000 Canadians embracing the opportunity to grow their savings securely. This alternative allowed for eligible withdrawals without repayment obligations, making it an appealing choice for many.
So, what's the solution? Fear not, dear friend! The discontinuation of the CMHC incentive is not the end of the road. In fact, as noted, it never truly gained traction.
There are alternative pathways waiting for you to explore, guided by mortgage and real estate professionals. These experts stand ready to tailor solutions specifically to your needs, ensuring the best possible outcome. These discussions are best held in confidence, providing a safe space for you to openly discuss your aspirations for your new home. Therefore, we encourage you to schedule a joint discovery call with both professionals. It's the initial step towards crafting a robust plan from the outset. Trust us, your dream home is well within reach, and there are experts poised to guide you every step of the way.
Together, we are here to collaborate with you on your home buying journey. Reach out to either of us, and rest assured, you'll have both of us working tirelessly on your behalf.
Mary Da Rosa, Real Estate Representative and Christina A. DeMarinis - Mortgage Agent Level 2 (Lic. # M22002731) VERICO - The Financial Forum., Ltd - (Lic. # 10505). You can follow them at: https://www.instagram.com/marydarosarealestate/ and https://www.instagram.com/christinaademarinis.mortgages/
As always you can book a meeting with me here!
