Canadian parties and their election promises to homebuyers

Today, most potential homebuyers in Canada are facing too many strong challenges. The main issues are the following: low supply, high demand, elevated home prices.

Many first-time buyers have difficulties with providing a necessary mortgage down payment, receiving stable income to cover the ongoing payments, and qualifying for a property they not only need, but actually want.

Obviously, it’s one of the main issues for the current election campaigns, and politicians are looking for ways to increase the Canadians’ chances of becoming homeowners.

Let’s look at some of the platform issues that may help you decide which party can be more useful for you.

The Liberals keep promoting their incentive program for first-time homebuyers, with not so many changes, as borrowers still need to provide a minimum down payment.

Although the program does offer certain advantages for those who would like to enter the real estate market (you share equity with the government, and it’s presented as interest-free), a cost remains, based on the home value growth, which may be even higher than the contract rate.

In addition to it, the First-Time Home Buyer Incentive (FTHBI) program demands the minimum down payment, and because of its limitations, it decreases the purchase price you can qualify for without FTHBI by approximately 6%.

In terms of the supply issue, the Liberals propose a national tax on vacant residential properties that belong to non-Canadians who don’t live here. The measure will also make sure foreign-owned homes are available for rent.

Meanwhile, the New Democratic Party wants to bring back the 30-year amortization period for insured mortgages.

According to the NDP, Canadians who can’t provide a 20% down payment, will have the possibility to raise the amortization period from 25 to 30 years, thus qualifying for about a 10% higher purchase price without increasing their monthly mortgage payments.

The NDP also promises to build 500,000 affordable residential properties during the next 10 years, and to introduce a national 20% foreign-buyers’ tax aimed at reducing the demand and home prices. As you know, such large municipalities as Toronto and Vancouver already have 15-20% tax on foreign buyers, so expanding in on the entire country will hardly have a significant effect.

At the same time, the Conservative Party is proposing the most ambitious and complete housing plan and focusing on borrowers with a good credit rating and stable income, who can’t provide a 20% down payment on properties with prices exceeding $1 million. The main goal is to raise mortgage insurance eligibility and then index it to real estate price inflation.

Moreover, they want to remove the stress test from mortgage renewals, letting homeowners search for a better rate without qualifying for a mortgage once again. The Conservatives also plan to introduce longer-term mortgages of 7-10 years, thus bringing more stability for homeowners and the entire housing segment.

In addition to it, they want to ban home purchases by foreign investors, who are not going to live in the country, for 2 years. Another promise coming from the Conservatives is building one million residential properties over the next 3 years.

You can decide which method of solving the housing market issues is better for your financial situation on September 20.