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Special
Programs for First Time Home Buyers
Buy
your home with 5% down
At mortgageforless we have assisted many First Time Home Buyers purchase
their first home with only 5% down. Since the 5% down program was started
by Canadian Mortgage and Housing Corporation it has given people right
across Canada an easier opportunity to own their own home. It was changed
recently to allow anybody to buy with 5% down so you no longer have to
be a FTHB. This could be your 2nd or 3rd home. The maximum purchase price
in major Canadian centres is now $250,000. CMHC insurance fees of 3.75%
of the mortgage amount will be added to the mortgage in this case. i.e.
a $150,000 mortgage = a $5265 insurance premium added to the mortgage
to make the total mortgage $155,265.
Using
Your RRSPs for Down Payment of a Home!
The federal government offers a tax-free withdrawal from a Registered
Retirement Savings Plan (RRSP) as a down payment for first-home buyers.
It's actually a great way to buy your first home. Say you opened an RSP
for 7000.00 and than later withdrew it along with your refund of 3000.00,
you could buy your first home for up the 190,000-purchase price with a
monthly carrying cost of approximately 1200.00 per month. You would need
a gross income of 60,000 and you would have to have had the RSPs established
for at least 90 days to qualify. A great way to buy your first home tax
free with the government chipping in at the same time.
There
are specific guidelines for the buyer(s) to follow to qualify for this
program:
1.
Meet Canada Mortgage and Housing Corporation (CMHC) First-Home Buyer Program
Definitions
2.
Each buyer may use up to $20,000 from their RRSP for down payment. That's
$40,000 per couple
3.
Revenue Canada defines this withdrawal as a loan to the buyer to be repaid
in equal amounts within 15 years
4.
The new property must be located in Canada and be the buyer's principal
residence.
5.
A T1036 application is required to be completed and taken to the institution
that holds the buyer's RRSP This Program may be used with the CMHC's First-Home
Buyer's Program (5% down payment). The RSP must be established for at
least 90 days before the closing the housing transaction
Easy
Start Mortgage
As a First Time Home Buyer you may find that the first year of mortgage
payments is the most difficult or that you have come up with a $10,000
downpayment, but you're still short $4000 in closing costs. With the variety
of banks and lenders we deal with you have a wide range of choice to help
you out as a First Time Home Buyer.
The
Easy Beginning Mortgage: We can arrange a mortgage with lower payments
in the first year to give you a break when you need it most. It's available
now, just in time for your move. The security of a five-year mortgage
with a first year payment break, the bank reduces your payments and the
five-year interest rate for a full year. It lowers your payments significantly
and can save you hundreds of dollars to help meet all those first year
expenses. A great help at the beginning! After the first year, your interest
rate and payments will automatically return to the five-year rate.
The
Cash Back Mortgage: We can arrange a mortgage that will provide you
up to 2% of the mortgage amount back to you on the closing date of your
transaction. This can help towards the closing costs or it can also assist
where you are paying an early renewal penalty to refinance for a better
rate.
Ontario
Home Ownership Savings Plan (OHOSP)
The Ontario government created this program to encourage first time buyers
into the real estate market. An Ontario Home Ownership Savings Plan may
be opened at any financial institution and earns interest at whatever
rate that institution is currently paying. An OHOSP is not a tax shelter,
so any interest earned is taxable. Depending on your income, a maximum
annual contribution to the plan could give you an Ontario Tax Credit of
up to $500 ($1,000 for couples). Your net income may not exceed $40,000
($80,000 for couples) to be eligible for the Tax Credit. For plans opened
after December 31, 1993, you may make contributions for five consecutive
years. Your plan must be closed and a home purchased within two years
following the fifth year of contribution. There is no limit to the amount
you can contribute on an annual basis, but your tax credit is based on
a maximum contribution of $2,000 ($4,000 for couples) per year. Eligible
homes must be occupied by you or your spouse and be suitable to live in
year round. You may use your OHOSP to purchase a newly constructed home,
however it may not be used to purchase the lot only. About 1 month before
your new home purchase closes, complete a Home Purchase Declaration form
(available at your financial institution). This will direct the institution
to forward the funds to your lawyer on or before closing.
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