What your clients would appreciate knowing this week!
First Time Home Savings Account (FHSA) launched April 1st (no it wasn't an April Fools Day joke either)
- You must be a First-time buyer as defined by the federal government (link here for your reference https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/first-home-savings-account/opening-closing-and-fhsa.html
- You can contribute up to $8,000 a year ($40,000 lifetime)
- Contributions to your FHSA are tax-deductible
- Gains and withdrawals are tax-free if used to buy a qualifying principal residence
- As an example of someone earning 80K income annually, deducting 8K if they contributed the max each year, it could save them between $2200-$3000 in tax, depending on the province.
- Unlike the Home Buyers' Plan (HBP), FHSA withdrawals do not need to be repaid (ie. you do not need to re-contribute a minimum amount each year or be taxed)
- You have 15 years to apply FHSA funds to a home purchase
- You can use BOTH the FHSA and HBP to buy a qualifying home (total up to 75K as of current limit)
What is happening with interest rates?
- Call me to discuss. A number of lenders have been busy reducing rates and offering promotions as we move into the thick of the Spring market. Best rates vary and depend on whether it is insured or not as well as the mortgage amount, loan-to-value, amortization length, credit score, etc. Rates as low as 4.45% for insured mortgages with a big bank and cash rebates up to $4000 are available. Having said this, best rates and lenders for any person must be considered with their short and long term plans in mind (to avoid costly penalties, facilitate their next move or purchase, etc). It's the overall cost of borrowing with their plans in mind that should be the focus, not just the lowest upfront rate for now.
Did you know that you could qualify for a mortgage without the Stress-test?
- For purchases, through select Credit Unions (most of whom I have partnerships with) has options to qualify without the stress test. They qualify based on the contract interest rate without adding the extra 2% that is required with the big banks. Specific criteria/requirements apply however.
- For mortgage transfers/renewals, if a homeowner took out an insured mortgage prior to Oct 16, 2016 or an insurable mortgage (prior to Nov. 30, 2016) they could be grandfathered under old qualifying rules. They must have NOT refinanced their mortgage since those dates in 2016 and the original purchase price was under 1 million.