What the Mortgage Charter Actually Does
The Canadian Mortgage Charter spells out the rights you have when you're renegotiating your mortgage. It calls on financial institutions to provide better relief measures over the next three years for Canadians facing renewals at much higher rates. The federal government hasn't budgeted any money for the charter, and it's unclear which banks — if any — have actually signed on.
Under the new charter, lenders are expected to notify you four to six months before your renewal date. It also emphasizes that lenders should have appropriate relief policies for at-risk borrowers, such as extending how long you have to pay down your mortgage.
What You Can Expect From Lenders
Here's what the charter lays out:
Lenders should allow temporary extensions of your repayment period if you're at risk. They should waive fees and costs that would normally be charged for relief measures. If you have mortgage default insurance and want to switch lenders at renewal, you shouldn't have to requalify under the insured minimum qualifying rate (the stress test for insured mortgages).
You should receive contact four to six months before your renewal to learn about your options. If you're at risk, you should be able to make a lump-sum payment to avoid negative amortization — that's when your balance grows because your payment doesn't cover the interest — or sell your home without prepayment penalties. And lenders shouldn't charge interest on interest if relief measures lead to a temporary period of negative amortization.
Tax-Free First Home Savings Account: The Numbers
The federal government introduced the Tax-Free First Home Savings Account in Budget 2022 to help you get on track toward buying your first home.
The account lets you contribute up to $8,000 per year, with a lifetime limit of $40,000, toward your first down payment. Contributions are tax deductible on your annual income tax return, like an RRSP. And withdrawals to buy your first home — including any investment income on contributions — are non-taxable, like a TFSA. Tax-free in; tax-free out.
As of October 31, more than 250,000 Canadians had already opened a Tax-Free First Home Savings Account to save for their first down payment. The accounts are currently available at more than 20 financial institutions across the country, and more are working to launch them soon.
The combined value of federal-provincial tax relief offered by the Tax-Free First Home Savings Account, compared to a taxable account for a couple living in Ontario, earning about $80,000 and each contributing $8,000 annually is detailed in Chart 1.2. Also shown is the maximum down payment this couple could make with help from the Tax-Free First Home Savings Account, Home Buyers' Plan, and the Home Buyers' Tax Credit.
Housing International Students and Protecting Them From Fraud
International students bring significant social, cultural, and economic benefits to Canada, while enriching the academic experience of domestic students. They also continue to bring long-term benefits to Canada, as many international students transition to permanent residency, and eventually, citizenship.
Canada is a top destination of choice for international students, thanks to our high-quality educational institutions; our welcoming, diverse society; and the opportunities to work or immigrate permanently after graduation. While international students have contributed to life on campuses across the country, some have also experienced challenges.
To help ensure the protection of international students, the federal government is enhancing the Letter of Acceptance verification tool to help crack down on fraudulent organizations that take advantage of international students wishing to pursue legitimate post-secondary educational opportunities in Canada.
Working with provinces, territories, and post-secondary designated learning institutions, the federal government will also put in place a Recognized Institutions Framework that would reward learning institutions with high standards around selecting, supporting — including by providing access to housing — and retaining international students. Additional details on these measures to help protect international students will be provided in the coming months.
Where to Learn More
For more details, visit the Government of Canada website here: https://www.budget.canada.ca/fes-eea/2023/report-rapport/chap1-en.html#a1.
If you have questions about how any of this affects your mortgage — or if you're thinking about buying your first home — reach out. We're here to help you figure out what makes sense for you.
