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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your RRSP withdrawal requires you to fill out a Home Buyers Plan Redemption Form to declare the amount that is being withdrawn, whether in a single amount or in installments.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, Mortgage Education

Mortgage Pre-Approvals: Top 3 Common Myths [VIDEO]

If you’re preparing to take the next step in the home-buying process, a pre-approval consultation is a key first step that can save you time and money

pre-approvals consultation

Image Credit: Rawpixel

Pre-approvals are a CRUCIAL first step in your mortgage journey. If you’re a first time homebuyer, it’s completely normal to feel apprehensive about the process but this apprehension often stems from common myths (often learned through friends and family who are well-intentioned and eager to assist but may be misinformed). It is important to speak to a licensed and experienced mortgage broker who can provide prompt answers to your questions while understanding how home ownership fits within your long- and short- term financial goals.

 

The Pre-Approval Process

A pre-approval consultation is a very simple process that generally takes about 10-15 minutes via telephone or online application. In order to recommend the best mortgage rate and products, your broker will first need to determine your mortgage eligibility by verifying your employment and/or income (via tax returns, paystubs, and/or letter of employment).

For example:

If you are salaried/hourly, a broker will request:

  • most recent paystub
  • letter of employment
  • last two year T4s (tax returns)

 

If you are self-employed, a broker will request:

  • last two year T1 generals full
  • last two year notice of assessments (with confirmation of taxes up to date)
  • if incorporated, we will additionally ask for
    • last 2 year business financials
    • articles of corporation

 

Upon determining your mortgage eligibility, your mortgage broker will narrow down the products and rates for which you qualify and get you started on your mortgage journey.

 

Debunking the Myths

Click our video below to see James Harrison, President and Mortgage Broker for Mortgages.ca unpack 3 of the most common myths of mortgage pre-approvals:

  • Myth #1: Pre-Qualified = Pre-Approval
  • Myth #2: Pre-Approved = Unconditional Offer Time
  • Myth #3: Pre-Approvals Last Forever

 

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.

blog, Mortgage Education

How to Pay Down Debt & Increase Your Cash Flow

Owing money can quickly become a vicious cycle when most of your earnings go toward paying creditors instead of lining your own pockets.

Pay-Down-Debt-Increase-Cash-Flow

James Harrison, AMP
Mortgages.ca

 

Many Canadians have accumulated debt to finance major milestones or to pay for smaller day-to-day items. Though debt is quite common, you should keep a close eye on your loans and think about cutting down. According to the Bank of Canada, most Canadians now owe $1.70 for every dollar they earn. As interest rates climb, homeowners are focusing on paying off debt and saving money in 2019.  

The higher your debt load, the less cash flow you have. Before your bills become too much to handle, talk to a mortgage broker about debt consolidation options and your eligibility to refinance. Mortgage brokers have the knowledge and resources to advise you on the most effective ways to pay down debt and increase your cash flow.

 

Pay High-Interest Loans First

Loans like credit cards, lines of credit, high mortgage rate loans, and private company loans are harder to pay off because a bigger portion of your payment goes toward interest. You can save money by paying off these bills first. For larger amounts that take longer to pay, consolidating debts into a lower interest secure line of credit or mortgage line of credit will help you save money so that you can repay the debt quickly.

 

Refinance Your Mortgage

You can lower your monthly mortgage payment and increase your cash flow when you refinance your home loan. Rather than continue to pay unrealistically high interest rates, you can consult a mortgage broker to find a lender that offers lower rates so that you can put more money toward the actual loan. A broker can also advise you on the best options to reduce your monthly mortgage payment so you can save more money for other things, like childcare.  

 

Consolidate Your Loans

If you have too much credit card debt or high-interest debt, consolidating them into one low-interest loan will reduce your monthly expenses to one manageable bill.

 

Save for an Emergency Fund

Saving money can be challenging when you owe creditors, but having money for unexpected emergencies will reduce your risk of going further in debt. Increase your cash flow by putting part of your earnings away each month so that you’re better prepared in an emergency.

In today’s borrowing culture, Canadian homeowners have high debt. Multiple loans and high interest rates can negatively impact your credit rating if you cannot pay your bills. Before your debt load becomes overwhelming, talk to a mortgage broker. A broker can help you find effective ways to save money by refinancing your mortgage or consolidating debt to a lower interest rate line of credit, and you can avoid lowering your credit score.

 

For more information on how a mortgage broker can help you reduce your debt, click Apply Now, email us at info@mortgages.ca, or call 647-795-8700 x 0 today for your free, no-obligation consultation.

With the help of a Mortgages.ca broker, you have nothing to lose and only great INSIGHTS to gain.