In these uncertain times there is some good news and an opportunity for first time buyers.
With prices down up to 30% in some markets across Canada, interest rate reductions in the past 2 years and some new government programs and incentives to encourage home buyers those with a well prepared plan can benefit buying their first home.
Opportunity for First Time Buyers
If you have less than 20% down payment you can purchase your first home up to $1.5M.
For example –
Angela and Rick have $110,000 for a down payment. They have some savings, some RRSP money and a gift from parents. They qualify for the new mortgage and the purchase is $1.1M they can make this purchased insured and access the lowest rates. The insurance premium required for access to the insured mortgage is added to the mortgage amount and amortized over the life of the mortgage.
Since this is a new build they also don’t pay the GST for the purchase portion over $1M. If the purchase had been over $1M they would pay GST on the additional purchase price up to $1.5M which is rolled into the mortgage and amortized over the life of that mortgage.
Also they can now amortize the mortgage for 30 years as a first time buyer.
Finally, the exemption of property purchase transfer tax for first time buyers up to $1.1M purchase of a new build means there is no tax on the first time purchase.
In this example Angela and Rick saved $75,000 in GST and property purchase transfer taxes making this a great opportunity them and an opportunity for first time buyers.
For parents looking to help their younger family members with a down payment there are also low cost options to provide early inheritance – reach out anytime for more information.
Links below about the details in the above post.
https://www.cmhc-schl.gc.ca/consumers/home-buying/mortgage-loan-insurance-for-consumers/what-is-mortgage-loan-insurance
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions
https://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/exemptions/newly-built-home-exemption