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CMHC’s New Incentives for First-Time Home Buyers

Everything You Need to Know About CMHC’s New Incentives for First-Time Home Buyers

First Time Home Buyers

James Harrison, AMP
Mortgage Broker
Mortgages.ca

 

Breaking into the Canada mortgage market as a first-time homebuyer can be daunting, especially when it comes to navigating incentives, offers, and financial hurdles. Luckily, CMHC’s newest Home Buyer Incentive Plan for 2019 is full of incentives tailored perfectly for first-time homebuyers, the most important of which are broken down below:

 

Payment for Equity

As part of the latest First-Time Home Buyer Incentive Plan, CMHC will pay 5% of the purchase price for an existing home and up to 10% for the value of a new home as part of a down payment assistance program in exchange for an equity stake. This means that the Government of Canada partners with you in a Shared Equity Mortgage, taking a share of the increase (or decrease!) in the property’s market value. To qualify for this incentive, first-time homebuyers must meet a short set of criteria:

 

  • Minimum down payment amount based on mortgage amount
  • Qualifying income is $120,000 or below
  • Total mortgage is no greater than four times the qualifying income
  • Homes must be below the purchase price of $500,000

 

The government’s equity stake, otherwise referred to as a Shared Equity Mortgage, is then repaid as a percentage of the selling price, which takes into account the gain or loss in property value.

 

Taking Advantage of Your Money: RRSP Withdrawals

The Home Buyer’s Plan, a federal program that acts as a first-time homebuyer incentive, allows you to use a $35,000 RRSP withdrawal (in one year) towards your new home purchase. Making your RRSP withdrawal requires you to fill out a Home Buyers Plan Redemption Form to declare the amount that is being withdrawn, whether in a single amount or in installments. 

 

Why First-Time Homebuyer Incentives?

In today’s housing market, it can take individuals years to save up enough for the minimum down payment of 5% on a home. With the help of the First-Time Home Buyer down payment assistance incentive and the RRSP withdrawal allowance, purchasing a home can come much sooner. 

 

These incentives, developed for Canada’s real estate market and the first-time homebuyer, offer a number of benefits that help one transition into home ownership, such as: 

 

  • Purchase a home with the future in mind
  • Reduce the financial burden without delaying property purchase
  • Shared equity mortgage means interest-free down payment assistance
  • First-Time Home Buyer Incentive allows choices for repayment based on property value, not interest
  • Savings on mortgage payments of up to $3,430 per year

 

Your first home is one of the biggest, most important purchases of your life. The Government of Canada has developed a system to help first-time homebuyers comfortably acquire and pay back a mortgage, with assistance that is based on property value, rather than an established interest rate. With CMHC’s First-Time Home Buyer Incentive, buying your first home just got much easier.

 

Apply now for a mortgage with Mortgages.ca and learn more! 

blog, Home Ownership, Mortgage Education

How To Pay Down Your Mortgage Faster

Paying down your mortgage will not only lower your debt, but it will also reduce the amount of money you spend on interest.

Happy Couple Saving Money

By: Scott Nazareth
Mortgage Broker

Your mortgage is one of the biggest and longest-running debts you pay. Your monthly payments can consume a big chunk of your earnings, reducing your cash flow. Paying down your mortgage will not only lower your debt, but it will also reduce the amount of money you spend on interest.

You can pay off your mortgage fast with lower interest rate loans and short amortization terms. Amortizations can range from thirty to thirty-five years. Many homeowners opt for longer time frames to lower their regular payments, but those increase the total amount of interest paid over the life of the mortgage contract. If a short timeline is not financially viable, here are some ways you can pay off a mortgage fast.

 

Lump Sum Payments

Paying a lump sum payment on your mortgage will shorten the time it takes to pay off your loan. Whether you put extra money down monthly, quarterly or yearly, the long-term savings will be substantial.

Every year, you can pay a lump sum of up to 20% of the outstanding principal. An annual lump sum payment will not only reduce the total amount of interest you pay, but it can also shave years off of the life of your mortgage.  For example, if you paid 10% of the remaining mortgage each year for five years, you will have paid 50% of the mortgage and halved the projected amortization period.

 

Accelerated Payment Plans

If your mortgage payment schedule only includes monthly payments, consider opting for an accelerated payment plan. An accelerated payment breaks your monthly bill into smaller amounts that are withdrawn weekly or biweekly. Accelerated plans with more frequent installments reduce the interest you’d pay over time. That is the equivalent of making one extra payment each year.

 

Same Payment on Lower Interest Loans

If your mortgage renewal has a lower interest rate, request to keep your monthly installments the same as they were with your previous rate. By maintaining a consistent payment plan on a lower interest loan, you will be paying more of your mortgage without impacting your budget. That will reduce the total interest you pay and the length of your mortgage.

 

Increase Mortgage Payments

When refinancing your mortgage, ask to increase your payments rather than accept the monthly rate set by the lender. Even a small increase of $100.00 more per month will lower the total interest you pay and take years off the life of your mortgage.

A home loan is typically the biggest debt most Canadians have, taking much of your hard-earned money, especially considering the interest fees. There are many simple and highly effective measures you can take to pay off your mortgage fast. Talk with a mortgage broker about the best mortgage renewal terms as well as strategies to lower debt so that you can be debt-free sooner.  

 

To find out how you can pay off your mortgage faster, contact one of our mortgage brokers for your free consultation by clicking on our ‘Apply Now’ button, emailing us at info@mortgages.ca, or by calling #647-795-8700 ext. 0 today.

 

With Mortgages.ca, you have nothing to lose and only great INSIGHTS to gain.

blog, Home Ownership

How to Budget Closing Costs for a Home Purchase

Forgetting to budget for closing costs is one of the most common mistakes new homeowners make

 

Calculate-Closing-Costs-Calculator

 

By:
Steve Harrison,
Mortgage Broker

If you are thinking of buying a home, you’ve probably started saving for the down payment. But have you considered how much you will need to save for the closing costs? If you haven’t, you are not alone. 

What are Closing Costs?

Closing costs are all the fees you will need to pay when the sale of the home or property is finalized. Some expenses are mandatory while others are optional, but before looking for a new home, it is important to talk to a mortgage broker about all of the financial obligations that come with buying a home. Your professional mortgage broker will explain what fees you will have to pay so that you can plan your closing day budget.

Why It Is Important to Save for Closing Fees

Not planning for closing fees will create unnecessary and unwanted financial challenges. Homeowners who are unprepared for closing day fees are often surprised, frustrated, and stressed by the additional expenses they’re asked to pay. Before buying a home, ask your broker about all of the fees that you’ll have to pay in addition to the mortgage.

Financial experts recommend saving between 1.5% to 2% of your home’s total value on your final mortgage closing costs. For example, if you are planning to buy a house for $600,000.00, you will need to save between $9,000.00 to $12,000.00 for your closing costs, such as land transfer taxes and legal fees.

Mandatory Closing Costs

Mandatory costs are the fees you have to pay on the closing day, such as lawyer fees, land transfer fees, homeowner’s insurance, and mortgage insurance taxes (if applicable).

You might also be responsible for paying prorated property tax and utility bill monies to the previous owner if they have prepaid these expenses. That would be outlined by your lawyer in your statement of adjustments.

Optional Closing Day Fees

Optional mortgage fees are expenses that you might have to save for, but they are not necessities. Moving costs, some utility hookup fees, changing the locks to your new home, renovations or upgrades, purchasing household items, pest control inspections, and unexpected repairs are all considered optional closing costs.

Photo by Douglas Sheppard on Unsplash

Buying a home can be expensive from start to finish. From deposits to closing fees, home buyers must save enough money to cover all the costs associated with purchasing a property.  Speaking to a mortgage broker before you start looking for your first home can help you plan for all areas of the purchase so that you can set realistic financial goals for your home purchase.

Need Mortgage Advice?

For a free consultation, visit our website and click on the ‘Apply Now’ button. You can also contact us by email at info@mortgages.ca or by phone at 647-795-8700 x 0.

With Mortgages.ca, you have nothing to lose and only great insights to gain.

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Mortgage Broker vs. Bank: Which Makes Sense For Me?

Purchasing a home is one of the most exciting experiences for first-time homeowners, but it can also be quite stressful.

mortgage broker meeting

Image Credit: Nik Macmillan

James Harrison, AMP
President / Mortgage Broker
Mortgages.ca

 

There are many steps to walk through before getting the keys to your new property, and a big challenge is securing a mortgage. Traditionally, most homebuyers use their own banks to finance a home purchase. In recent years, more mortgage holders have wondered if they should renew with a bank or look at other finance options. Let’s look at why more buyers are visiting brokers instead of a bank to refinance their home loan.

 

More Lenders & Options

As the cost of home ownership rises, buyers are looking for ways to save money. Bank representatives can only give homebuyers the services and rates offered by their company. On the other hand, mortgage brokers are not working for one lender but will work with 30 or more lenders from a variety of institutions, including major banks, credit unions, trust companies, and more. Your options are far more varied when working with a mortgage broker, and they do the work of researching and vetting for you.

 

Greater Knowledge of the Industry

Banks provide many different services to their clients, and while knowledgeable, representatives are not experts on mortgages and loans. Their expertise is limited to the bank’s services, policies, and loan structures.

Brokers specialize in mortgages, so they have superior knowledge of the industry as a whole. They work with tens of lenders and have an understanding of all the loans each lender provides. A mortgage broker’s job is to find the best options for loans and mortgage renewals, and they are always keeping up with the latest industry news and trends. So you can rest assured your broker can assess your needs and match you with the best mortgages.

 

A Mortgage Broker Works for You

A bank works primarily for itself, not its customers. The services are based on the institution’s gains, not on the client’s. Bankers make sure mortgage loans will not hurt their bottom line and will limit risks at all costs.  

Mortgage brokers work for their clients. Their job is to find the deal that best suits your needs. A broker looks at your situation, including your short-term and long-term goals, then helps you find a suitable mortgage from the right lender. They will go through all the pros and cons of each agency and answer your questions to ensure you have a clear understanding of the loan and lender.

Buying real estate is one of the most significant and expensive investments you will ever make, and struggling to find the right lender can add unnecessary stress. Whether you are a first-time homebuyer or you want to refinance your existing mortgage, a mortgage broker can help you choose the right lender to meet your current and future needs.  

While most consumers went to their own bank in the past, more homeowners are seeking the help of a mortgage broker. Good mortgage brokers are experts who work to find the best deal for each client. If you’re getting a mortgage or adjusting one, research different brokerages and full-time brokers that can help you. Read reviews online or ask your friends, family, co-workers, and realtor for recommendations.

 

For more information on how a mortgage broker can help you, contact Mortgages.ca today for your free, no-obligation consultation. You can contact us by phone at 647-795-8700 x 0, by email at info@mortgages.ca, or by visiting our website and clicking ‘Apply Now’ to speak to a mortgage broker today.

With a mortgage broker, you have nothing to lose and only great INSIGHTS to gain.