Mortgage Changes: What You Need to Know for 2025 

If there's one thing we can always count on in the mortgage world, it's change. Over the last year, there have been several changes that impact first-time homebuyers, current homeowners, and even those looking to invest in secondary properties.

Here’s a rundown of all the changes:

First-Time Home Buyer's GST Rebate on New Homes

What’s changing? With the First-Time Home Buyer’s GST Rebate, the Goods and Services Tax (GST) will be eliminated for first-time home buyers on new homes up $1 million and reduced for first-time home buyers on new homes between $1 million and $1.5 million.

First-time home buyers may be eligible if they are:

• Buying a new home from a builder
• Building a home on land they own/lease
• Buying shares of a co-operative housing corporation

Pros:

• First-time home buyers can save up to $50,000 on a new home.
• Could help first-time homebuyers get into higher-end markets, like the Bow Valley.

Cons:

• The rebate only applies to first-time buyers and not those who currently own and want to build.

First-Time Buyers: 30-Year Amortization on New Build

What’s changing? First-time buyers purchasing newly built homes can now access a 30-year amortization period, even with an insured mortgage (less than 20% down payment). Previously, this option was only available for uninsured mortgages (more than 20% down payment).

Pros:

• Lower monthly mortgage payments make homeownership more affordable.
• Could help more buyers qualify for a mortgage by reducing the stress of high payments.

Cons:

• CMHC has introduced a premium surcharge of 0.20% on insured mortgages with 30-year amortizations, increasing overall costs.
• A longer amortization means more interest paid over time.
  

First-Time Buyers: Higher Insured Mortgage Limit

What’s changing? The price cap for insured mortgages (previously $1M) is increasing to $1.5M, allowing first-time and secondary home buyers to purchase more expensive homes with less than 20% down.

Pros:

• More purchasing power in expensive markets.
• Expands opportunities for buyers who couldn’t previously afford a home due to the $1M cap.

Cons:

• May have little impact in more affordable regions where home prices are below $1M.
• Larger mortgage size means higher monthly payments.

First-Time Buyers: RRSP Withdrawal Limit Increase

What’s changing? The maximum RRSP withdrawal for a down payment under the Home Buyers' Plan has increased from $35,000 to $60,000.

Pros:

• More tax-free funds are available to put toward a home
• Reduces reliance on high-interest borrowing for a down payment.

Cons:

• Must repay the withdrawn amount over 15 years to avoid tax penalties.
• Not all first-time buyers have significant RRSP savings.

Current Homeowners: No More Stress Test for Uninsured Mortgage Switches

What’s changing? Homeowners switching lenders at mortgage renewal no longer need to pass the stress test, as long as their mortgage remains uninsured (more than 20% down payment or equity) and they are making a “straight switch” with no additional borrowing.

Pros:

• Easier to qualify when switching lenders, leading to more competitive rates.
• Encourages homeowners to shop around instead of being forced to stay with their current lender.

Cons:

• Does not apply to refinances or mortgage increases.
  
• Lenders may have their own qualifying criteria.

Current Homeowners: Insured Refinances for Secondary Suites

What’s changing? Homeowners with insured mortgages can now refinance up to 90% of their home’s improved value to build a secondary suite (e.g., basement apartment, laneway house). The goal is to increase rental housing supply.

Pros:

• Allows homeowners to build rental units, generating additional income.
• Helps address the housing shortage.

Cons:

• Only applies to homeowners with insured mortgages (less than 20% down when purchased).
• Property value capped at $2M.
• Cannot be used for short-term rentals.

Alberta-Specific: Higher Land Transfer Fees

What’s changing? Land transfer registration fees in Alberta have more than doubled, increasing closing costs for buyers.

Example:

• Old Fees on a $500,000 Home: $420
• New Fees on a $500,000 Home: $1,000
• Old Fees on a $1M Home: $740
• New Fees on a $1M Home: $1,900

Pros:

• Alberta’s fees are still lower than in most other provinces.

Cons:

• Buyers now face significantly higher upfront costs at closing.

New Lending Cap on Uninsured Mortgages

What’s changing? The Office of the Superintendent of Financial Institutions (OSFI) is capping the number of new uninsured mortgages (more than 20% down payment) that banks can issue if they exceed 4.5 times a borrower’s gross income.

Pros:

• Aims to prevent excessive borrowing and financial risk.

Cons:

• Makes it harder for some borrowers to qualify for mortgages with traditional banks.
• Doesn’t apply to mortgage brokers and alternative lenders, who may have better options.

My Thoughts

For buyers in the Bow Valley, Canmore, and BC, these changes will have a mixed impact. The increase in insured mortgage limits to $1.5M is significant, as home prices in these regions are often well above the previous $1M cap. This means more buyers will have access to homes in Canmore and other high-priced areas with a smaller down payment.

The ability to refinance for secondary suites is a positive change, as it may encourage more homeowners to develop rental units, increasing available housing. Of course, in our area, I’ve yet to see how this will impact us, as we already have very specific bylaws for rental units. Meanwhile, Alberta’s increase in closing costs means buyers need to budget for higher upfront expenses.

For those looking to buy in BC, these federal changes interact with provincial housing policies, such as BC’s vacancy tax and zoning changes for more multi-unit housing. Buyers should weigh all factors and consult a mortgage broker to determine the best strategy for securing financing in 2025.

Navigating these changes can be complex, but that’s what I’m here for. If you’re thinking about buying or refinancing, let’s chat about how to make these new rules work in your favour.