“The opportunity would encourage renters to buy,” said Phil Wazonek of Distinct Realty Services. “But it could also affect investors if they buy a house with a basement suite and rent that out.”
While campaigning in B.C. on Wednesday, Prime Minister Stephen Harper announced that a re-elected Conservative party will increase the Home Buyers’ Plan withdrawal limit from $25,000 to $35,000. Introduced in 1992, the program allows Canadians to borrow, on a repayable basis, from their own Registered Retirement Savings Plans to purchase a home.
“It was introduced in 1992, so this $10,000 increase is not as big as it first appears, given the effect of inflation – but still a good idea,” says Wazonek. “As [the Canadian Real Estate Association] indicates, 2.8 million Canadians have used this program so it is quite popular.”
The changes, if implemented, would encourage more renters to make the move into homeownership, taking tenants from the rental pool. But, as Wazonek notes, it could benefit those first-time home buyers intent on finding a property with an income suite.
The Canadian Real Estate Association has already expressed its support for the proposal.
“By reducing or avoiding mortgage default insurance fees and building home equity sooner, Canadians can put their own money to work for them,” said Pauline Aunger, president of CREA, suggesting a number of buyers would opt for a convention mortgage and effectively bypass the need for mortgage insurance. “Maintaining the value of the HBP by increasing withdrawal limits is critical,”
Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
Another campaign promise from the Conservative government could create an opportunity for first-time investors – but for more seasoned players, is much more likely to cost them tenants.